CMU Professor Lectures SMC Members on Tax Reform
By Eileen Anderson, SMC Government Relations Manager

It was back to the classroom for members who met August 3rd, the day after they President and Congressional leaders reached a debt ceiling increase deal. Robert P. Strauss, Professor of Economics & Public Policy, Heinz School of Public Policy & Management, Carnegie Mellon University, gave a presentation to the Government Relations committee on federal tax reform.

Strauss, who served for three years on the staff of the U.S. Congress's Joint Committee on Taxation, educated the group to prepare them for SMC's grassroots lobbying trip to Washington, D.C. on September 14th and 15th. The committee is in the process of developing a position on tax reform.

SMC wants to be out in front on this issue because the tax reform of 1986 was not beneficial to small business. It created a large gap between business and personal rates and there was a huge migration by businesses to file at the individual rate.

As part of the debt ceiling deal, a 12-person bicameral, bipartisan, congressional committee will be convened to identify an additional $1.5 trillion in deficit reduction which may include tax reform in the mix to reach that goal. If tax reform is not included in the legislation reported by November 23rd it may be driven later by the expiration of tax cuts at the end of 2012.

In two hours, the professor covered key premises, tax policy issues, objectives of a good tax system, ideas for tax reform and fielded questions. He challenged the group to determine priorities and get something constructive done in Washington, D.C.

He said a high priority for members should be the alignment of the top marginal tax rate for individuals and businesses to create more neutrality in the form of businesses. He thought of a top marginal around 28% was sufficient and dismissed a top marginal rate of 20% for business and individuals as too low.

He also suggested taxing cap gains as ordinary income and eliminating the Alternative Minimum tax.

SMC board member and Chair-Elect, Mark Shelleby, Treasurer of Vista Metals, Inc., had this to say, "I found his commentary extremely thought provoking and insightful. His comments were steeped in the practical sense of what can/should be completed with the tax code."

Strauss's recommended meeting reading materials and biographical sketch can be found below.

Eileen Anderson can be reached at 412-342-1606 or eileenanderson@smc.org