The past two months have brought myriad of mixed signals for those who are following the efforts of the Chairmen of the Ways and Means and Finance Committees to enact tax reform this year. In June, the Senate Finance Committee announced they were seeking input from Senators on which tax breaks should retained under a “blank slate” approach. The comments, which were due by July 26th, are to be kept confidential for more than 50 years and apparently at least 60 Senators have submitted recommendations.
Chairmen Baucus and Camp have had two stops on their tax reform tour so far – in Minneapolis, MN and Philadelphia, PA. Both have indicated their intention to mark-up legislation in their Committees this fall. Chairman Camp has indicated that the House will likely consider tax reform before the end of the year. If Senator Baucus is able to pass a proposal out of the Senate Finance Committee, the likelihood of the Senate considering it remains very much in doubt.
Majority Leader Harry Reid (D-NV) has stated that tax reform will only progress in the Senate if it raises significant revenue - at least $1 trillion in new tax revenue to be exact. This contradicts the insistence of Republicans that tax reform proceeds in a revenue neutral fashion and has prompted Minority Leader Mitch McConnell (R-KY) to concede that tax reform this year is in jeopardy.
President Obama meanwhile has called for a “grand bargain” on business tax reform -- lower corporate rates in exchange for an increase in spending on transportation and infrastructure projects. This is a significant change in position for the Administration and has soundly been rejected by the business community who maintains that any savings from tax reform should not be used on unrelated spending.
The fall promises to be a busy time for the tax-writing Committees and given that tax packages seem to come together in the eleventh hour, tax reform remains possible this year.