04/10/2012 01:53 pm ET Updated Jun 10, 2012

Tiny Little Hope for Tax Reform

There is a tremendous gulf between the president and the Republicans on the proper size of government and the magnitude of revenue and spending. But, surprisingly, the president and his Republican counterparts are all in the same room and often on the very same page on the fundamental elements of tax reform.

All of the tax reform plans are now on the table. Paul Ryan (R-WI), the Chairman of the House Budget Committee, has introduced his budget resolution. The administration has released its Fiscal 2013 Budget and the president's Framework for Business Tax Reform, and Mitt Romney and the other Republican candidates have each penned their own tax position papers. The similarities are striking.

Corporate Tax Rates. President Obama proposed a dramatic reduction in the corporate tax rate. So did Mitt Romney, Paul Ryan, Newt Gingrich and Rick Santorum.

Lower Taxes For Manufacturers. Rick Santorum wants even further tax reductions for manufacturers. President Obama is in favor.

Business Write-Off for New Investments. Mitt Romney would allow business to write-off their new investments for another year. So would President Obama and Rick Santorum.

Broaden the Corporate Tax Base. President Obama proposed to broaden the corporate tax base. Mitt Romney proposed the same thing. Paul Ryan agrees.

Lower Rates; Fewer Brackets. Mitt Romney wants to lower individual tax rates. Rick Santorum want to reduce the number of tax brackets. President Obama and Paul Ryan want to do both.

Deny Wealthy Individuals Some Deductions. President Obama would deny wealthy individuals some of their deductions. That's exactly what Mitt Romney and Paul Ryan want.

Make the R&D Credit Permanent. Mitt Romney would make the research and development credit permanent. So would President Obama. Newt Gingrich and Rick Santorum agree.

Repeal the Individual AMT. President Obama would repeal the alternative minimum tax for individuals. Mitt Romney, Paul Ryan, Newt Gingrich and Rick Santorum all concur.

No VAT; Maintain a Progressive Income Tax; Reduce Complexity. The President, Mitt Romney, Paul Ryan, Newt Gingrich and Rick Santorum all oppose a VAT or other consumption tax. They all favor progressivity in our tax system. And they all believe that the tax code is too complex.

International Tax Reform; Minimum Tax on Foreign Earnings. Even on the most contentious issue -- the taxation of U.S. multinationals -- both parties agree that the current system, which encourages U.S. companies to keep their foreign earnings abroad rather than repatriating them to the United States, needs dramatic revenue-neutral reform.

These matters of agreement are not trivial, and suggest a path toward substantive agreement on fundamental elements of meaningful tax reform. The common proposals, in turn, pose problems that both parties will together have to solve.

For example, if President Obama and Mitt Romney each get their way and reduce the highest corporate rate below the highest individual rate, then high-income individuals will be able to use corporations to reduce their tax rate. This situation has arisen before, but the solutions to prevent individuals from using corporations to shelter income -- the personal holding company rules and the accumulated earnings tax -- are complicated and ineffective. Both parties will need to craft a new solution to prevent corporations from becoming tax shelters for individuals.

Likewise, if Paul Ryan's, Mitt Romney's and the president's proposals to deny high-income individuals a portion of their deductions become law, high-income individuals will try to use offshore tax haven companies to get back their deductions. Both parties will need to prevent wealthy taxpayers from using foreign tax-haven companies to reduce their tax bills.

Beyond the similarities of their plans and the collaboration that the proposals require, each candidate has made real ideological concessions in the interest of good tax policy.

President Obama, by proposing a reduction in the corporate tax rate and an expansion of the tax base, has embraced the central principle of President Reagan's Tax Reform Act of 1986.

Republicans should applaud this.

And Mitt Romney and Paul Ryan, by suggesting that wealthy taxpayers should be denied a portion of their deductions, effectively concede that some high-income taxpayers should see their taxes increase.

Democrats should cheer.

But differentiation -- not cooperation -- wins elections. So, during this election year, each candidate will resist the slightest suggestion that they agree with each other on any issue, much less tax policy.

But the fact that they do agree on so much offers some, however tiny, hope of real tax reform.

After the election, of course.