Congress Seen Coming Up Short In Talks On Code Rewrite: Taxes
21 October 2013
Posted by: Authors: Marc Heller & Aaron E. Lorenzo
Authors: Marc Heller & Aaron E. Lorenzo (Bloomberg)
With the clock already ticking to
the next fiscal deadline, lawmakers will probably come up short
in efforts to include a revision of the tax code in year-end
Taxes are sure to be a part of the discussion as the
conference committee looks for ways to bridge gaps between
Democratic and Republican approaches to spending, tax lobbyists
and analysts told Bloomberg BNA.
Unless the two sides can agree on whether to seek greater
government revenue -- and how to use any additional revenue that
a tax revision may generate -- a breakthrough on revamping the
tax code isn’t likely. The conference committee must report to
Congress by Dec. 13 as part of the deal lawmakers reached to
reopen the government and raise the debt ceiling.
"It certainly provides an opportunity for tax reform,
although it’s a long shot,” said Robert Bixby, executive
director of the Concord Coalition, a fiscal advocacy group. "The
real sticking point is what to do with the resulting revenue.
That hasn’t gone away.”
The budget provides a forum to advance the issue and
possibly set up a process that can prevent Senate filibusters or
other procedural hurdles and move tax revisions faster, analysts
said. The basic approach to a tax rewrite -- reduce top rates,
simplify the code and broaden the tax base -- is a point of
agreement between House Ways and Means Committee Chairman Dave Camp, a Republican from Michigan, and Senate Finance Committee
Chairman Max Baucus, a Montana Democrat.
Broader issues about revenue still divide the parties so
deeply that some analysts question whether a budget conference
will push a tax bill forward. Generally, Democrats seek
greater tax revenue to boost programs and reduce the deficit,
while Republicans want any additional revenue to come from
economic growth that may be achieved through lower tax rates
and other policies.
The conference committee may map out an expedited process
for a tax overhaul, perhaps directing congressional committees
to take action by a certain date. It may also offer direction
on top tax rates, although some Republican members of the Ways
and Means Committee told BNA that specific rates could be left
out of any tax overhaul instructions and be left to the tax-writing committees to work out later.
The House-passed budget envisions a top corporate and
individual tax rate of 25 percent, down from a top corporate
rate of 35 percent and a top individual rate of 39.6 percent.
The committee may also strike a balance between new
revenue from a tax revision and savings from changes to
entitlement programs, a potential path through the tax and
spending stalemate in Congress.
Or, the committee’s deliberations may slow tax
changes in the short run by giving Camp a reason to delay
introducing a bill if he is having trouble building support,
said John Buckley, a professor of tax law at Georgetown
University and former Ways and Means chief tax counsel for
Representative Charles Rangel, once the panel’s top Democrat.
"I don’t think fast-tracking is the issue here,” Buckley
told Bloomberg BNA. "I think votes are the issue.”
Camp has consistently said he intends to introduce a bill
in time for a vote in the committee in 2013.
Revenue remains a "tremendous” challenge between the
competing budgets offered by House Budget Committee Chairman
Paul Ryan, a Wisconsin Republican, and Senate Budget Committee
Chairman Patty Murray, a Democrat from Washington, said Jonathan Traub, a former Republican staff director on the House Ways and
Means Committee and managing principal for tax policy at
Deloitte Tax LLP.
The Republican-led House and Democratic-led Senate are so
far apart on revenue, and on the politics behind that issue,
that an agreement will be challenging, Traub said.
Bixby said he doesn’t expect Republicans to agree to use
any revenue from code revisions for debt and deficit reduction
unless they receive spending cuts to entitlement programs in
return, nor does he expect Democrats to agree to cut spending
on entitlements unless they secure tax overhaul revenue for
debt and deficit reduction in return.
Such a swap could happen, said Ed Lorenzen, senior adviser
at the Committee for a Responsible Federal Budget.
"The political reality of selling some tough choices on
entitlements where you’re asking people to accept some changes
in their benefits is much easier to do if you show it’s part of
a shared sacrifice somewhere in which tax reform is raising
revenues,” Lorenzen told Bloomberg BNA.
Camp could hold intact the structure of a revenue-neutral
bill to overhaul the tax code and "turn a couple of dials to
raise revenue,” he said.
This article first appeared in bloomberg.com.