At the age of 76, former House Ways and Means Committee Chairman Wilbur D. Mills practices law full-time in Washington. The Arkansas Democrat, one of the most influential legislators of his time, steered a host of tax bills through his committee before he retired from Congress in 1976.
Usually you start off with something, and this time I regret to say the Treasury proposal for reform, I don't think, is very well thought out. I don't think it's as much reform and simplification as is alleged for it.
I think there is a determined effort on the part of some people to do away with the progressivity of the income tax. I think that most of the things that are emanating from the Treasury now are in that direction. Any time you have less than five brackets, I think, it will destroy progressivity, and I think that's an essential part of the income tax. It was in the beginning, and it should always be. People should be required to pay on the basis of ability to pay.
I think the [House Ways and Means] Committee will write its own bill, including some of the things that are in Treasury I or II. They the members have as much guts as anybody. I don't know that the lobby groups have so much effect. It's the people at home you should listen to more than anything else -- at least I always did.
[Political-contribution money] gives you an entree, someone to speak to about your point of view. I think the impression is overdrawn that when you give somebody something you have control of his thinking. Frankly, there's really no constituency for tax reform. I don't care what the polls show. When you get down to the details of it, people that want reform disappear. It's all right to take away somebody else's but don't take away mine.
There is hardly any tax bill that came out of committee where we didn't make some change or stop something somebody was doing. The 1968 act was probably the most inclusive of all reform acts. There were about 75 loopholes or shelters taken care of at that time. Some of the major ones we didn't get to because of the pressure not to do it. If you start to eliminate charities, there is a spontaneous reaction from those who receive the monies, not those who give. The argument is made you'll destroy all your colleges and universities, all your libraries and art museums and all.
I had a bill drawn one time (in the late 1950s) that would have eliminated all deductions except for business deductions. It had rates starting at 5, 10, 15, 20, 25 percent . It got more money than we would have gotten under the provisions of existing law. But I didn't introduce it. I got to thinking about what Cordell Hull said in a speech on the floor of the House as chairman of the Ways and Means Committee when they introduced the first income tax bill in 1913. He said tax rates from one to 6 percent would produce more money than the mind of man would ever conceive to spend.
It's fine to have 5 to 25 percent rates, but once it gets to be 15 to 50 percent -- you have to think about what will happen in the future when you're enacting something. I got to thinking about that and decided to drop it. You should never enact a tax provision without thinking about the consequences of your action, not just the revenue part.
The way you make it simple is to eliminate deductions, special provisions. Treat all income alike. Under low rates you do that. No businessman should have to call in a tax lawyer when he is thinking about making a business decision.
Don't underestimate Congress . . . . Congress will act whenever it has to, when it's necessary to do it. The trouble is, the American people don't react to anything until there is a crisis. The American people are slow to react, not the Congress.
I don't think [a tax reform bill] will pass this year, but I think it'll pass next year. It's taken too long on the budget. It's delayed consideration of the tax bill. You're not ever going to have a balanced budget if you expect growth to take care of this size deficit. Growth generates greater government spending. Your spending generally goes up faster than your revenue if you don't put a freeze on it.
If I were doing it, I would just freeze everything across the board, everything. Social Security and defense, everything. We wouldn't spend any more for it than we did last year. If you hold the line on spending, your growth will in time reach that line.
I would [increase taxes if it] was necessary, but I would do it across the board. I wouldn't do it as the Treasury seems to want to do it, to get money through every little nit-picking way. They saw what a fix they got into when they tried to say, if I used the company car I had to keep mileage and all that? You don't get enough revenue out of something like that to justify the cost of doing it. There are so many of those little things the Treasury keeps getting them into. It's silly.