March 28, 2013

Fight For Tax Reform Will Be An Uphill Battle

Though members of both parties have publicly called for tax reform, major obstacles to true reform remain.

Senator Max Baucus, Chairman of the Senate Banking Committee, went against the wishes of most of his party when he voted against Patty Murray’s balanced budget, a signal that some believe is a bad omen for tax reform:

Tax lobbyists and other observers said the budget vote exposed a rift between Baucus and Democratic leadership over revenue, and capped weeks in which the Finance chairman failed to shift his party’s budget to a more centrist position on taxes.

That dynamic, experts say, could make it more difficult for Baucus to speak for his party in tax negotiations, and give him less leverage at a time when Republicans in the House are pressing for revenue-neutral tax reform.

“I think Baucus is in a tough position,” one tax lobbyist said. “If he doesn’t move, he will be accused of dragging his feet and not moving the ball.”

“If he does do something, he has to answer for it,” the lobbyist added. “For Baucus, keeping things the way they are through 2014 may be the best option.”

In the House of Representatives, the picture isn’t much clearer. Ways and Means Committee Chair Dave Camp wants to reform the tax code, but it’s unclear if he will be able to round up the votes:

The Finance Committee chairman could be off the hook if the White House and GOP leaders strike a grand deficit bargain or if Speaker John Boehner (R-Ohio) decides against allowing a Ways and Means tax reform package from getting a floor vote.

“Camp will push hard for the Ways and Means Committee to move forward this year, but getting a House floor vote will be very difficult,” said Cathy Schultz, a tax expert at the National Foreign Trade Council.

Tax reform needs to happen, and needs to include additional revenue. We must keep the pressure on Congress and not let them punt on this important priority.

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