'We're Going to Step Up the Pace': Tax Reform Team Fighting Divided Congress, News Cycle
There are barriers aplenty. President Obama has expressed more interest in amending the corporate tax than taking on the income tax on individuals.
House and Senate Republicans generally are looking for changes that don’t raise revenues. In a letter to Baucus, 14 GOP senators, including Senate Republican Leader Mitch McConnell, of Kentucky, asserted that tax reform “should not be used as a pretense for increasing the net tax burden on American families and job creators, particularly in the absence of any serious effort to address long-term spending problems.’’
On the other hand, Senate Democratic Leader Harry Reid, of Nevada, has publicly instructed Baucus to come up with a plan that raises significant new revenue – at least $1 trillion over the next decade -- from business and wealthy individuals. Reid insists he will not consider – or bring up for consideration – any plan that fails to do so.
The two chairmen spent a considerable amount of time during the recent congressional recess meeting with individuals and business representatives in an effort to develop an approach to the massive overhaul. Much of that time was spent concentrating on corporate taxes although both lawmakers are insisting that changes in the personal income tax – including the possibility of lowering the top rate to 25 percent – must be up for consideration.
In Memphis on Sept. 9, Baucus and Camp met with corporate representatives, including officials from FedEx, who expressed animus toward the nation’s 35 percent corporate tax rate – considered the world’s highest – even though the effective rate is significantly smaller as a result of write-offs and various loopholes.
The pair indicated a steep drop in the corporate tax rate while simultaneously eliminating many of the corporate deductions made available under the current code is under consideration.
But it appears they aren’t prepared to get rid of all deductions. Earlier during the break the chairmen traveled to Silicon Valley where they met with representatives of Square, a technology start-up firm. Baucus too the opportunity to inquire about the benefits Square might derive from tax incentives for research and development while Camp made inquiries about the nation’s international tax code and the benefits the company might accrue from lowering the corporate tax rate.
“We have heard over and over again that job creators, like these in the high tech sector, are looking for a simpler, flatter, fairer tax code,” Camp said. “Repairing our broken tax code can make America a more attractive place to invest and hire.”
Baucus said the code can be used to provide companies with an economic boost.
“There’s a reason why companies like Square and Intel call America home -- it’s because we’re innovators,” Baucus said. “We’ve got a real opportunity in tax reform to give innovators here in the U.S. a lift.”