Whether tax reform lives or dies could come down to “the score” from a powerful but little-known team of number crunchers on Capitol Hill.
As Congress’s nonpartisan scorekeeper on tax matters, the Joint Committee on Taxation (JCT) takes no stance on whether a revamped tax code should raise more revenue for deficit reduction, how low rates should be, or whether the deductions for mortgage interest and charitable donations should be on the chopping block.
But they would provide the only official projection of how a tax reform bill would affect the country’s bottom line — just as they did when Washington last reworked the nation’s tax laws in 1986.
That makes their input crucial — and potentially frustrating — to House Ways and Means Committee Chairman Dave Camp (R-Mich.) and Senate Finance Committee Chairman Max Baucus (D-Mont.), both of whom have told colleagues they plan to move forward with a comprehensive tax revamp this fall.
“If you don’t spend a lot of time working on tax bills, you probably don’t have an appreciation for how important they’ll be,” one tax-writing aide told The Hill. “At the end of the day, the score’s the score.”
But while Camp and Baucus could see their hopes for tax reform rise and fall with the final JCT tallies, congressional aides and outside observers also say the staffers will offer a wide range of technical support as lawmakers seek to rewrite a tax code that affects everyone in the country.
By all accounts, Tom Barthold, JCT’s chief of staff, and others at the committee are well aware of how loaded their plate will be if tax reform moves beyond the planning stages.
At the same time, the official scorers also know how rare a total revamp of the tax code is and are said to be gearing up to play their role in the process.
“They’re all jazzed up,” another tax-writing aide said. “They’re ready.”
Still, the tax committee’s importance in the reform debate underscores the magnitude of the challenges that policymakers face, and why many are skeptical that Baucus and Camp’s best efforts will be enough to get tax reform across the finish line.
Camp, for instance, has said that his bill will be scored as revenue-neutral by JCT, while Baucus has assured fellow Democrats that his bill will be scored as bringing in more revenue to the Treasury.
But given how complicated and massive the tax code is, hitting a certain revenue target in a reform package is easier said than done.
On top of that, JCT projections over a 10-year window basically account to educated guesses — if guesses that John Buckley, a former JCT chief of staff, calls generally accurate when it comes to big-ticket items.
“There are no do-overs or makeups in revenue estimating,” said Edward Kleinbard, another former chief of staff at the tax committee. “JCT will do its best, as it always does, and economic life will evolve in whatever direction it happens to take.”
The JCT scores provided their share of hurdles in the 1986 tax reform efforts, at a time when leaders in both parties all agreed that a rewritten tax code should drastically reduce rates while bringing in the same amount of revenue.
One JCT projection late in the game left then-Ways and Means Committee Chairman Dan Rostenkowski (D-Ill.) and then-Finance Chairman Committee Bob Packwood (R-Ore.) scrambling to fill a revenue hole that was billions of dollars deep.
“They were absolutely crucial,” Packwood says now about the JCT and their scores. “They were the only estimates we had to go on.”
This time around, Barthold and the rest of his team have spent months giving tax writers critical support as they move toward putting pen to paper.
The JCT produced a 568-page report detailing the findings of 11 Ways and Means Committee working groups, which dug into areas of the tax code ranging from financial services to manufacturing.
Just before lawmakers left town for the August recess, Rep. Sandy Levin (Mich.), the top Democrat on the Ways and Means Committee, also circulated a JCT estimate that said that a plan resembling the GOP’s goals for tax reform would require cutting $5 trillion in tax preferences over a decade.
More generally, the JCT acts as a sounding board for lawmakers and staff, and would offer technical assistance in drafting a complicated tax overhaul, according to congressional aides and former tax committee officials.
Because the tax code is both complex and contains overlapping parts, scorekeepers also give tax writers advice on how changing one provision could impact other parts of the system.
Getting rid of one tax break, for instance, could push taxpayers to latch on to others in the code or affect how other preferences are claimed.
“It’s the world you deal with. You may disagree with the numbers,” said Buckley, also a former tax counsel for Democrats on Ways and Means. “You don’t have a lot of basis for that disagreement. Everyone respects their objectivity.”
Buckley added that, over the last quarter century, the JCT had taken on more of a technical adviser role for tax writers, after committee staff was “major architects” of the 1986 package.
But the JCT also now faces a vastly different political landscape, with the two parties increasingly divided on tax and fiscal issues.
One of the debates that the JCT is forced to wade into is whether their projections grapple enough with how a rewritten code will affect the economy.
Republicans have long said that streamlining the tax system will spur economic growth that current scoring rules don’t allow the JCT to take into account. Democrats are largely skeptical of that idea, which is generally known as “dynamic scoring.”
Under current House rules, the JCT would produce a dynamic score for a tax reform bill that makes it through Ways and Means, in addition to its official projection.
But Kleinbard, now a professor at the University of Southern California, says he still expects the JCT’s work to become a target for frustrated lawmakers.
“Every aspect of tax legislation has become more polarized, and the JCT staff is sometimes subject to abuse by pundits or by members or by staff,” Kleinbard told The Hill. “And they’ve always been very good at absorbing the abuse and getting on with their jobs.”