Ron Quixote

A U.S. senator in the minority party from a podunk state might seem to be on a fool's errand by seeking to reform federal taxes.

But Sen. Ron Wyden (D-Ore.) may not be so ridiculous with what he calls a "fair, flat tax." Says who? None other than former Sen. Bob Packwood, R-Ore., the man Wyden replaced a decade ago in the Senate.

"Every now and then Don Quixote succeeds," Packwood says.

Packwood, now a D.C. lobbyist, would know. Twenty years ago, Packwood was head of the Senate Finance committee and among a handful of lawmakers working with the Reagan White House to overhaul the notoriously special-interest-friendly tax code.

Their story was chronicled not in a 17th-century literary classic, but in Jeffrey Birnbaum and Alan Murray's Showdown at Gucci Gulch, a standout in its own genre of how to win in Washington against the odds.

Wyden, who jokes that he's the only senator in 100 not running for president, has read that book twice in the last six months and spoken with both Packwood and former Sen. Bill Bradley (D-N.J.), another protagonist in the showdown.

"It will be like '86," Wyden said in a recent hourlong interview during which he repeatedly refused to accept the premise that his plan stood no chance. "It will take off when people see how out of whack the system is."

Wyden's tax reform, which he wrote with Rep. Rahm Emanuel, D-Ill., would simplify—or, in their eyes, "flatten"—the federal tax code by creating three rates at 15, 25 and 35 percent; treat income such as capital gains and dividends the same as wages; but keep deductions for mortgage interest, children and charitable donations.

Progressives aren't running in horror at the idea of a flat tax because it's not the same single rate applied to rich and poor that Republican presidential candidate Steve Forbes floated in 1996.

The Wyden proposal has moved from praise on progressive blogs after its introduction last fall to space in the Wall Street Journal for a Feb. 17 op-ed by Wyden and Emanuel, and a national speaking circuit for Wyden that will include talks at the Commonwealth Club of California in San Francisco on March 24, and the Cleveland City Club on April 14.

Wyden, a member of the Senate Finance Committee, says taxpayers could use a one-page form and that his plan would lower the deficit by $100 billion over five years.

"It's worth pursuing,'' Packwood says. "He's on the right track ... One thing I learned is don't think small thoughts. If you go for it, you better go for the whole hog rather than the pig's foot."

WWeek 2015