While the drumbeat for comprehensive tax reform has been thumping for a while, recent news and reports are adding more oomph to that beat. There has been heightened scrutiny of inversions – where U.S. companies acquire foreign competitors and “relocate” headquarters to the lower tax country. This week Bloomberg BNA released a report that surveyed tax and accounting leaders on the impact of certain tax provisions on their companies’ capital expenditures – it was an overwhelming “meh, not so much.” Meanwhile, Kinder-Morgan, the energy company that pioneered the use of Master Limited Partnerships (MLPs) to reduce corporate tax liability, announced they were abandoning the model, increasing attention to this murky area of tax strategies.

All of this puts a “face” on the problems in the tax code and how there are a myriad of popular tax avoidance schemes out there. The tax code should be designed to generate the revenue necessary to pay for government services and any tax subsidy should be designed to induce publically beneficial behavior that would not otherwise occur. Finally, the system should reward companies that make the best widget, not those that employ the craftiest tax attorney. If lawmakers can fix it all, they should start by fixing what they can.

Policymakers of both parties have been searching for answers to stem the recent increase in companies inverting to avoid the 35 percent corporate income tax rate on foreign earnings (which nobody pays anyway as evidenced by our recent report). The President has directed Treasury to look for ways to deal with the issue administratively as well.

The Bloomberg BNA report was eye-opening. Like several other “temporary” tax provisions, policies that allowed bonus depreciation (deducting half the cost of capital acquisitions in the first year) and expanded expensing (writing off) of purchases expired. But while lawmakers are clamoring for these and other provisions in the so-called tax extenders package to be renewed or even made permanent, business leaders told Bloomberg the bonus depreciation and expanded expensing don’t make a dime’s worth of difference in the capital expenditure decisions. They’re happy to take advantage, but it doesn’t affect their decision making. Only 10 percent of the tax and accounting business leaders Bloomberg talked to said that the expiration of these provisions would reduce their company’s capital expenditures in 2014. This begs the question: why renew them at all? While the provisions were created to combat the 2008 recession, the Congressional Research Service has been pointing out that these provisions are a poor stimulus for years.

Earlier this week, Kinder Morgan announced that they were packing in their MLP status and combining into a corporation. (Read more about Master Limited Partnerships in this report). Richard Kinder, who formed the entity after losing out on the top job at Enron to now jailed Jeffrey Skilling, was a pioneer of the exotic tax structure. Essentially an MLP allows each investor to own a unit of the company and while these can be traded like stock they are not stock under the IRS rules. As a partnership it is not subject to a corporate income tax and investors earn high returns. Kinder Morgan essentially outgrew the structure and wasn’t paying the high yields that other newer MLPs were. While MLPs aren’t going away with Kinder Morgan’s decision, the IRS is increasing scrutiny on the structure and raising questions about whether it has any purpose other than as a tax dodge.

While calls for tax reform have been around for a while, these various issues provide concrete examples of the need to move quickly. But absent a major breakthrough, the country can’t wait to tackle these and other issues. Just the idea of comprehensive reform is getting companies to rush to invert to lock in the current generous structure before reforms take hold.  No reform is far worse than piecemeal reform. All the more reason for policymakers to act now.