A Chance for Bipartisan Tax Reform?

Bipartisanship is not often found in the U.S. Senate. Jim Bunning (R-KY) has prompted a one man shutdown of unemployment benefits and the Federal Highway Administration, adding insult to injury by complaining about missing a basketball game.
But as Floyd Norris writes in the New York Times, two senators, are collaborating on overhauling the tax code. Judd Gregg (R-NH) and Ron Wyden (D-WI) are co-sponsoring a bill that would bring some much needed reform to personal and corporate income taxes. The bill would clean up some of the clutter that has accumulated over the last thirty years, particularly from the Bush tax cuts, which Norris describes as leaving us "a legacy of some of the least responsible tax legislation ever passed."
The Wyden-Gregg Bill has the makings of an effective and useful bipartisan agreement on reform:

The bill reflects preferences of the two senators. Mr. Gregg is worried about capital formation and about reducing tax reasons for capital to flow to areas that might be less productive. Mr. Wyden wants to preserve progressivity and to assure that the tax breaks that remain are available to all.
One result is a change that keeps preferential tax rates for capital gains, but adjusts the
computations so that people in the two lower tax brackets they propose — 15 and 25 percent — actually pay lower rates than do those in the upper bracket. Another is a change in the break for municipal bond interest that assures a middle-income taxpayer would get the same benefit, in dollars, as would a taxpayer in a higher bracket.
One interesting proposal is to reduce the tax incentive for companies to borrow money by reducing the deduction for interest payments. That reduction would be based on the inflation rate, and is too complicated to explain here, but the important point to Mr. Gregg is that it could encourage companies to raise equity rather than debt.

We'll see if this effort can survive in the Senate's poisonous atmosphere.