Is there any chance of passing comprehensive tax reform this year? In a Congress that’s notoriously deadlocked, securing a once-in-a-generation piece of legislation not only sounds near impossible, it probably is. But even though odds are minimal that something like the 1986 tax-reform package is possible, some members are looking to that landmark bill. They note it was passed by a familiar-enough landscape of each party controlling a chamber, just like today. Some look at today’s Democratic Senate and Republican House and hope for the same.
And so bipartisan working groups in the House have been looking for common ground on issues like corporate tax rates and energy taxes, while groups in the Senate are going to start doing the same. Those two areas illustrate the potential for agreement. There’s widespread agreement that the America’s high corporate tax rates are hindering economic growth. On energy taxes, the fracking revolution is causing some members to look anew at oil and gas tax breaks. Just as there are flickers of movement on immigration and gun safety, so too with taxes.
A Republican member of Congress, who asked not to be identified in order to speak candidly, shared with National Journal thinking about the prospects for tax reform and why it was important to take a holistic look at the code rather than just pick the low-hanging fruit. “We can’t cherry-pick one provision and say we’ve done reform,” said the Republican member.
The GOP member argued that with piecemeal changes “you don’t get the economic growth, the job creation and the higher paychecks. It’s about unemployment, but it’s also about stagnant wages.”
The Republican member sees encouraging signs out of the Obama administration, including the president telling House Republicans this week that he favored revenue-neutral corporate tax reform in a more definitive manner than he allowed in previous discussions. The member was also very pleased that the president is eager to “start crunching the numbers.… It was a very good meeting.”
The parties are well apart, with the Democratic budget out of the Senate looking to raise close to $1 trillion and Republicans wanting revenue-neutral reform. But the Republican member insisted that the bonhomie in the working groups bodes well for putting something together.
“If you just look at the big number, you go to your corners. But there are so many items on tax reform that we don’t necessarily have a partisan divide on.… We need to get away from the topline, and that’s why these working groups are so important,” the member told NJ, adding, “I think you build big bills from the ground up.”
The member agreed with President Obama, who reportedly told the Republicans, “If I just [target] some loopholes, you won’t be able to defend them.” Go big or go home.
Can it really happen? Congress is, of course, a much different place than it was in 1986. The parties are polarized, the lobbies stronger, the debt worse. Still members blow on the embers of hope. Big reform may be a fool’s errand. And there’s serious economic debate about whether tax reform — a mantra for both parties — actually does that much good for an economy. Still, Congress has some capacity for moving things. Trade bills, like permanent normal trade relations with Russia, have made it through the tunnel of horrors that is Congress.
House Speaker John Boehner has reserved the prestigious bill number, H.R. 1, for tax reform. This is like building a mansion when you’ve just assembled a dollhouse. Some people, though, have their little hammers out, which seems quaint, and even a little inspiring.