Why the Republican Tax-Reform Proposal Is Likely Going Nowhere

As with immigration reform, Republicans may not want to pick a big policy battle before the midterms.

National Journal
Sarah Mimms
Feb. 26, 2014, midnight

After months of work, Re­pub­lic­an Rep. Dave Camp, the House ma­jor­ity’s lead tax-writer, is set to re­lease an out­line of his tax-re­form over­haul plan Wed­nes­day. But Re­pub­lic­ans are already say­ing it’s un­likely to go much fur­ther.

“I have no hope for that hap­pen­ing this year,” Sen­ate Minor­ity Lead­er Mitch Mc­Con­nell said of passing a tax-re­form pack­age.

The same thing happened just last month with im­mig­ra­tion re­form. House Re­pub­lic­an lead­ers trot­ted out their im­mig­ra­tion prin­ciples at their an­nu­al re­treat in Janu­ary and, just a week later, Speak­er John Boehner an­nounced that the cham­ber was un­likely to move le­gis­la­tion on the is­sue in 2014, cit­ing his con­fer­ence’s con­cerns about the ad­min­is­tra­tion’s will­ing­ness to en­force im­mig­ra­tion law.

Con­fused? Just look at the cal­en­dar.

Re­pub­lic­ans are, of course, eager to show their con­stitu­ents that they’re work­ing on con­ser­vat­ive policy ideas that will re­form the na­tion. But this is an elec­tion year, and the last thing many mem­bers want is to open them­selves up to cri­ti­cism over ma­jor and likely con­tro­ver­sial policy, such as over­haul­ing the im­mig­ra­tion or tax sys­tems.

Camp’s plan — which would over­whelm­ingly sim­pli­fy the tax sys­tem by us­ing just two tax brack­ets, at 10 per­cent and 25 per­cent — will be news for a few days. If it’s well re­ceived it could move fur­ther. If it’s torn apart, Re­pub­lic­ans can hope that the eight months between now and Elec­tion Day will mute any up­roar.

Re­pub­lic­ans be­lieve they will hold the House next year (with good reas­on) and that they have a shot at the Sen­ate. Push­ing either tax re­form or im­mig­ra­tion would de­tract from what the party be­lieves are win­ning ar­gu­ments over the Af­ford­able Care Act and the cur­rent eco­nom­ic cli­mate. As Re­pub­lic­an think­ing goes: Why mess with what’s work­ing?

These same is­sues were at play last year when Camp planned to re­lease a draft of his tax pro­pos­al in the fourth quarter. At the time, Re­pub­lic­ans were hurt­ing from poor polling num­bers in the wake of the gov­ern­ment shut­down and rid­ing on the troubled rol­lout of the Af­ford­able Care Act. Lead­er­ship asked Camp to wait.

Rep. Dave Reich­ert, R-Wash., who sits on the House Ways and Means Com­mit­tee, firmly be­lieves that House Re­pub­lic­ans are no longer fa­cing any real road­b­locks to re­form. Reich­ert poin­ted to Wed­nes­day’s draft re­lease as a sign for op­tim­ism.

“I think that there’s some pos­it­ive things that have happened that have sort of cre­ated move­ment,” he said. “And I think that Sen­at­or [Ron] Wyden be­com­ing the chair­man of Fin­ance on the Sen­ate side is a good thing. I think that the Obama­care rol­lout has sort of died down. That gives us an op­por­tun­ity to sort of high­light the tax-re­form bill.”

When they dis­cussed the pos­sib­il­ity of re­leas­ing a draft at this year’s Re­pub­lic­an re­treat in Janu­ary, Reich­ert said that the re­cep­tion was pos­it­ive over­all. The group of Re­pub­lic­ans con­cerned about mak­ing such a big move dur­ing an elec­tion year was small. Though as Billy House re­por­ted last month, even fel­low Ways and Means mem­bers were not op­tim­ist­ic dur­ing the re­treat that tax re­form in real­ity, however pop­u­lar it may be con­cep­tu­ally, would go any­where this year.

Reich­ert brushed off Mc­Con­nell’s Tues­day com­ments and said he is hope­ful that House lead­er­ship — which has not yet com­mit­ted to bring­ing the is­sue to the floor — will put pres­sure on the Sen­ate to act.

“The Sen­ate has sort of been a naysay­er on al­most any­thing in­nov­at­ive,” Reich­ert said laugh­ing. “So — not to slam the sen­at­or — but we’re plan­ning on mov­ing for­ward. I hope that the sen­at­or sees some be­ne­fit of mov­ing for­ward. And I hope our lead­er­ship and our chair­man are hav­ing con­ver­sa­tions with [Mc­Con­nell] and some folks over there.”

Boehner has been sup­port­ive of Camp’s ef­forts, but wheth­er the is­sue ac­tu­ally makes it onto the le­gis­lat­ive roster this year re­mains an open ques­tion. For now, Ways and Means mem­bers are just fo­cused on get­ting the pro­pos­al in­to a markup.

The Sen­ate ma­jor­ity is no more con­fid­ent that tax re­form is pos­sible this year. Ma­jor­ity Lead­er Harry Re­id echoed Mc­Con­nell’s state­ment on Tues­day, though he pit­ted the blame on Re­pub­lic­an ob­struc­tion­ism for pre­vent­ing a tax over­haul.

“It will be ex­tremely dif­fi­cult — with the ob­struc­tion that we get here from the Re­pub­lic­ans on vir­tu­ally everything — to do something that should have been done years ago. I think that Camp is right in com­ing for­ward with a piece of le­gis­la­tion,” Re­id said Tues­day.

Demo­crats are in an odd po­s­i­tion, Re­id noted, with the ab­sence of their own tax writer, former Sen. Max Baucus, who left Con­gress earli­er this month after he was nom­in­ated to serve as the U.S. am­bas­sad­or to China. Wyden of Ore­gon has since taken the gavel of the Sen­ate Fin­ance Com­mit­tee. “We’re over here start­ing over again,” Re­id said.

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