The Window for Tax Reform Is Closing

If there’s no basic agreement on corporate-tax reform by July 31, there likely won’t be one in the 114th Congress.

 House Budget Committee Chairman Paul Ryan (R-WI) questions Congressional Budget Office Director Douglas Elmendorf during a hearing in the Cannon House Office Building on Capitol Hill February 5, 2014 in Washington, DC.
Fawn Johnson
Add to Briefcase
Fawn Johnson
May 18, 2015, 4:01 p.m.

Tax writers in Con­gress thought they had the rest of the year to put to­geth­er a new cor­por­ate-tax scheme for the coun­try, but now they have a new dead­line—Ju­ly 31. If ne­go­ti­at­ors don’t come up with some kind of rudi­ment­ary agree­ment by then, it will be al­most im­possible to im­ple­ment any­thing but a few routine ex­ten­sions of pop­u­lar tax breaks be­fore the 2016 elec­tion.

Staffers from both the House and the Sen­ate tax-writ­ing com­mit­tees said Monday that their pan­els haven’t giv­en up on put­ting to­geth­er a cor­por­ate-tax over­haul this year. The Fin­ance Com­mit­tee work­ing groups are ex­pec­ted to sub­mit their re­ports on pos­sible areas of agree­ment on tax changes at the end of the month, and they will try to draft those pos­sib­il­it­ies in­to le­gis­la­tion in June and Ju­ly.

But House GOP lead­ers last week punted at their first op­por­tun­ity to move the tax-re­form ball for­ward. Now, aides in­volved in the ef­fort say, the over­all task is harder.

If it doesn’t hap­pen this year, tax re­form in 2016 is vir­tu­ally out of the ques­tion. There are too many pres­id­en­tial can­did­ates in Con­gress who would be re­luct­ant to vote on a tax pack­age that dir­ectly im­pacts very few voters. In­di­vidu­al taxes aren’t ex­pec­ted to be part of the re­form bill, law­makers and ana­lysts agree.

Mean­while, Demo­crats are be­com­ing louder in their protest over link­ing any tax-re­form bill to a must-pass trans­port­a­tion bill. They ar­gue that short-term ex­ten­sions of High­way Trust Fund au­thor­ity can­not con­tin­ue with the car­rot-and-stick lure of tax re­form at the end of each post­pone­ment.

This week, Cap­it­ol Hill tax writers were sup­posed to have iden­ti­fied $8 to $10 bil­lion in rev­en­ue raisers to al­low the coun­try’s high­way and trans­it sys­tem to op­er­ate through the end of the year. That would have giv­en them six months to fig­ure out pos­sible changes on the cor­por­ate-tax front. That forth­com­ing tax pack­age, in the­ory, also was sup­posed to raise the re­quis­ite $89 bil­lion for a five- or six-year high­way bill that every­body wants.

But in­stead of pro­pos­ing a stop­gap bill for high­ways and trans­it through the end of the year, House Ways and Means Com­mit­tee Chair­man Paul Ry­an and Trans­port­a­tion and In­fra­struc­ture Com­mit­tee Chair­man Bill Shuster offered a two-month ex­ten­sion. One House aide said that was all they could man­age, giv­en the pres­sure from a few key law­makers who said they wanted to keep up the ur­gency for a big­ger high­way bill.

The House is slated to vote on the two-month high­way ex­ten­sion this week. The bill is ex­pec­ted to pass without too much trouble, al­though Demo­crats already are mak­ing noise about this be­ing the last stop­gap they will tol­er­ate. Rep. Earl Blumenauer, a Demo­crat from Ore­gon, wants to go as far as amend­ing the bill to state that there won’t be an­oth­er short-term high­way ex­ten­sion.

Yet aides for the GOP tax writers said Monday that they want to pass an­oth­er high­way ex­ten­sion in Ju­ly, this time with off­sets. An aide for the Ways and Means Com­mit­tee said it was still Ry­an’s plan to ex­tend high­way au­thor­ity through the end of the year and pass both a trans­port­a­tion and tax bill at that time.

Aaron Fobes, press sec­ret­ary for Sen­ate Fin­ance Com­mit­tee Chair­man Or­rin Hatch, said law­makers had made pro­gress on find­ing the off­sets for a longer-term high­way ex­ten­sion, but they needed more time to “work with our col­leagues on both sides of the aisle.”

This means tax writers must pull double duty for the next few months. First, they must find both the mon­et­ary off­sets and the polit­ic­al will for an­oth­er par­tial-year high­way ex­ten­sion by Ju­ly 31. Then they have to fig­ure out how they will fix the tax code with­in the few months they would buy if they man­age to pull off the first step. Staffers in­dic­ated that the Ju­ly 31 tax deal doesn’t have to be item­ized down to the last sec­tion of U.S. code, but it does need to of­fer a work­able path for­ward on agreed-upon tax items. And high­ways have to be taken care of no mat­ter what.

Sen. Thomas Carp­er, a Demo­crat from Delaware, is work­ing on a com­prom­ise meas­ure that would give tax writers time to come up with a cor­por­ate tax bill while also en­sur­ing a long-term high­way bill, ac­cord­ing to a Carp­er aide. He has been work­ing with Demo­crat­ic and Re­pub­lic­an col­leagues to as­semble a long-term strategy for in­fra­struc­ture that in­cludes al­tern­at­ive fund­ing ideas that would take ef­fect only if tax re­form doesn’t make it across the fin­ish line, the aide said.

De­tails about those al­tern­ate pay­ment mech­an­isms are still be­ing worked out be­cause Carp­er wants his com­prom­ise to be a bi­par­tis­an ef­fort. Still, Carp­er and those he is ne­go­ti­at­ing with would prefer a “pro-growth busi­ness tax re­form” bill that uses some of the rev­en­ues it raises for in­fra­struc­ture.

Both Carp­er and Sen­ate En­vir­on­ment and Pub­lic Works Com­mit­tee rank­ing Demo­crat Bar­bara Box­er also have been clear that they don’t want to con­tin­ue ex­tend­ing trans­port­a­tion au­thor­ity without a long-term end game. They in­tro­duced a two-month high­way ex­ten­sion last week, say­ing it was time for law­makers to face up to the hard choices of keep­ing the High­way Trust Fund solvent, even if it costs money. They in­dic­ated that an­oth­er short-term ex­ten­sion in Ju­ly would be prob­lem­at­ic.

EPW Com­mit­tee Chair­man James In­hofe also is in the camp of law­makers who don’t want to con­tin­ue the short high­way ex­ten­sions ad nauseam. He and Box­er plan to pass a long-term trans­port­a­tion bill in their com­mit­tee in June, even the fund­ing is­sue re­mains out­stand­ing. “That’s some­body else’s prob­lem,” In­hofe told Na­tion­al Journ­al re­cently when asked about the tax re­form/fund­ing conun­drum. “My ob­ses­sion is we’ve got to have the [high­way] bill, and we’ve got to pass the bill.”

What We're Following See More »
USED IN LAS VEGAS SHOOTING SPREE
Trump Says He Signed Order Recommending Ban on Bump Stocks
2 hours ago
THE LATEST
PRIORITIZES ELECTION HACKING
Sessions Forms Cyber Task Force
3 hours ago
THE LATEST
ESCORT SERVICES USED TO WOO RECRUITS
NCAA Strips Louisville of Basketball Championship
4 hours ago
THE LATEST

The N.C.A.A. "upheld penalties against Louisville’s men’s basketball program related to a sex scandal involving players, recruits and prostitutes, and ordered the university to forfeit dozens of victories, including its 2013 national championship." Andre McGee, a former Louisville player serving on the basketball staff in 2013, solicited an escort service that he used to entertain recruits in an on-campus dormitory. Louisville officials called the decision "wrong." It is the first time the N.C.A.A. has stripped a program of the national championship.

Source:
HALF OF 2016 LEVELS
Hiring of Deportation Officers Drops Under Trump
7 hours ago
THE DETAILS

"The Trump administration is failing to hire law enforcement personnel to enforce immigration laws despite a significant push to do so, according to new Homeland Security Department documents. The hiring of new deportation officers at Immigration and Customs Enforcement dropped in half to just 371 total in 2017, according to information provided to potential vendors for a contract to help ICE boost hiring."

Source:
HEARING THIS AFTERNOON
Mueller Indicts Attorney for Making False Statements About Gates
8 hours ago
THE LATEST
×
×

Welcome to National Journal!

You are currently accessing National Journal from IP access. Please login to access this feature. If you have any questions, please contact your Dedicated Advisor.

Login