Politico
January 01, 2013

Tax writers say reform effort still alive following cliff deal

Faced with a rebellion over the Senate-passed fiscal cliff bill Tuesday, House Ways and Means Committee Chairman Dave Camp stepped in with a word of caution to fellow House members: Killing this bill would put the brakes on a tax code overhaul before it even starts.

Camp’s message underscored the tenuous nature of a top priority for tax writers in both parties: a comprehensive re-write of the tax code in 2013.

Many had hoped that a fiscal cliff deal would set up a fast-track tax reform process next year, and corporate CEOs were particularly vocal about the need for a corporate tax overhaul.

But when negotiations between House Speaker John Boehner and President Barack Obama faltered in mid-December, fiscal cliff ambitions were scaled back. And while the final deal hammered out by Vice President Joe Biden and Senate Minority Leader Mitch McConnell prevents tax hikes on millions of Americans, it’s silent on a broader tax reform.

Instead, the parameters of a tax code re-write — revenue targets and timetables — might instead become part of the next round of deficit talks over the debt ceiling.

And tax writers in both chambers say they will proceed with their reform plans.

Camp (R-Mich.) saw the fiscal cliff deal as vital to keeping a potential tax reform alive. Addressing his party in a second closed-door meeting on Tuesday, Camp’s goal was to drive home the argument that the bill is just the first in a series of tax and budget skirmishes leading up to the ultimate goal of comprehensive tax reform.

His pitch was simple — the Senate bill has distinct advantages for Republicans if that overhaul gets under way. When the bill becomes law, the Bush-era tax rates will become permanent for more than 99 percent of all taxpayers — no more temporary tax rates — and they become the starting point for any kind of reform.

Plus, since the fiscal cliff deal did not scale back or eliminate any individual or corporate deductions, those expenditures will be available as bargaining chips for lawmakers jostling for lower rates or favored provisions.

Senate Finance Committee Max Baucus is optimistic that tax reform is “alive and well” following the fiscal cliff deal.

“There are no tax expenditure provisions here, which make it easier to do tax reform — at least individual tax reform. And second there are virtually no corporate provisions in here so the road is clear to do corporate reform, which is also very important,” Baucus told reporters. “So does it help? I think it makes it easier.”