Is Tax Reform Possible in 2017?
Nearly three decades have passed since the last major overhaul of the U.S. tax code. Republican and Democratic policymakers agree (often for different reasons) that reform is desperately needed. Nevertheless, Congress has thus far been unable to overcome the partisan divide and come together on how to reform the nation’s tax laws.
This Congress, Senate Finance Committee Chairman Orrin Hatch (R-UT) – by way of follow up to a December 2014 Republican Finance Committee staff whitepaper on comprehensive tax reform – organized five Finance Committee working groups, which each produced a bipartisan discussion draft on various areas of tax policy (individual income tax, business income tax, savings and investment, international tax, and community development and infrastructure). More recently, earlier this year House Republicans introduced a policy paper title “A Better Way,” which outlines their approach to comprehensive tax reform. However, despite work by both tax-writing committees over the last several years, and without active and direct personal involvement of the president, lawmakers have been unable to gain sufficient buy-in to arrive at the desired end result. Things could be different in the 115th Congress.
Note, however, while tax reform will be the major tax agenda item for the new Congress, that debate will be affected by what does or does not happen in the lame duck session, by changes in the composition of the tax committees resulting from the election, and the identity of the individuals chosen for the top tax policy positions in the new administration.
We discuss all of the aforementioned issues in greater detail in our Post-Election Analysis.