There doesn't seem to be a great deal of dispute among the politicos in Washington about whether the U.S. tax code needs reform or not. Just about everyone agrees it needs fixing. The question then becomes, just what is likely to be possible considering the current makeup of Congress and its recent history of inaction.
As has been widely reported for a while, Republicans in the majority of both chambers favor the idea of broad tax reforms covering everyone from individuals to corporations. Meanwhile, the top Democrat among Senate tax writers recently took a position on reforms that should be of interest to high net worth individuals in Texas and elsewhere.
It might be that the recommendations presented by Oregon Sen. Ron Wyden earlier this month stand as much as a snowball's chance in hell of becoming reality. But since the matters involved have been known to fuel tax controversies that spark IRS investigations, we figure it might be worth taking note.
At the center of Wyden's reform target are a number of tactics that he says some investors use to avoid "tens of billions of dollars" in taxes. He lists options, derivatives and swaps as devices of concern. Backed by a minority party report, Wyden recently claimed these strategies make it possible for those who use them to adjust the timing, character and nature of income to gain the greatest tax advantage for themselves.
He suggests that because most taxpayers lack the resources and ability to do the same thing, it amounts to a difference in taxing policy that is unfair to average taxpayers.
This wish list of reforms might never be fulfilled, but it's important to know what's on it.