GOP leaders waver on tax reform

Republican leaders are wavering on how aggressively to pursue an overhaul of the tax code this year, just three months after the party’s top tax writer vowed to pass legislation with or without President Obama’s cooperation.

Speaker John Boehner (R-Ohio) has cast doubt on the likelihood of a big GOP tax push, and when Obama called for comprehensive reform in his State of the Union address on Tuesday night, key Republicans sat on their hands.

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“There’s a debate going on about whether we can get to the kind of tax reform we want given the outcome of the election,” Boehner told television anchors before Obama’s address. “We’d love to do tax reform,” he said.

“Lower rates for all, clean up the code, make it simpler. But why go through all that effort if it isn’t going anywhere, or why go through that effort if the outcome would be unacceptable?”

At the outset of a press conference on Wednesday, Boehner said the two parties “must work together on pro-growth economic policies — things like making sure that our tax code is competitive.”

But the Speaker made no firm commitment on legislation.

The equivocation is a far cry from the rhetoric top Republicans used in the weeks after the November election.

“Tax reform is more necessary now than it was in 1986, and that is why the Ways and Means Committee will write, act on and pass comprehensive tax reform legislation in 2013,” Chairman Dave Camp (R-Mich.) declared in a Nov. 15 speech to the Tax Foundation. “Let me repeat that: We intend to move a comprehensive tax reform bill in 2013 — no matter what.”

Camp told The Hill on Wednesday that he remained committed to passing a tax overhaul out of the committee this year, but whether it will get a vote on the House floor remains an open question.

“I’m not going to get ahead of myself. I’m going to take it one step at a time,” the chairman said in an interview.

The shift is born of a reluctance to wade into a negotiation with Obama, a partner that Boehner and other senior Republicans increasingly distrust. And while Boehner once agreed with the president that tax reform and a limited rate increase in 2012 could generate upward of $1 trillion in new revenue to reduce the deficit, he pulled that offer from the table after Obama won more than $600 billion in tax increases at the beginning of the year.

Republican leaders in the House and Senate are now ruling out any additional revenue, reverting to their plan to pursue tax reform that is revenue-neutral.

Rep. Pat Tiberi (R-Ohio), a senior Ways and Means member, said Boehner’s comments underscored that tax reform would have to start in the House, and he gave voice to the deep frustrations Republicans have with the Democratic-led Senate and the White House.

“I think the Speaker’s obviously expressing a frustration with the lack of the Senate getting much done and the lack of leadership this president is providing on big issues,” said Tiberi, who is close with both Boehner and Camp. “I don’t think the two things are incompatible.”

Still, a decision to put off tax reform would likely rankle Republicans on the Ways and Means Committee, who have made the achievement a top priority since the beginning of 2011.

Aides say Camp has Boehner’s full support to advance a tax overhaul in the committee and is moving forward. On Wednesday the chairman announced the formation of 11 separate bipartisan working groups on tax reform, the next step in a process that could lead to legislation.

“It’s a long process, and I’m going to move the ball down the field, day in and day out,” Camp told The Hill. “I don’t think the commitment has changed. I just think [the Speaker] is verbalizing the reality that it’s a difficult thing to do, but most important things are difficult.”

The long-running Republican debate over tax reform strategy underscores the heavy lift of rewriting a code for the first time in more than a quarter century. Some lawmakers believe the party should take the lead on the issue regardless of Obama’s cooperation, while others are worried about the ramifications of voting on legislation that would limit popular deductions if the measure stood little chance of becoming law.

Sen. Orrin Hatch (Utah), the top Republican on the tax-writing Finance Committee, said he understood the House GOP’s frustrations but advised them to push forward anyway.

“It’s always worth the trouble,” Hatch told reporters. “They send a message that they’re doing something, which this outfit isn’t willing to do.”

Rep. Paul Ryan (R-Wis.), chairman of the House Budget Committee, also backed action on tax reform. “We’re going to do it this year. That’s all I’ll say,” Ryan told The Hill after referring questions to Camp.

Camp has also been working with his Democratic counterpart in the Senate, Finance Committee Chairman Max Baucus (Mont.), who on Wednesday pressed Obama’s nominee for Treasury secretary, Jack Lew, on the administration’s commitment to tax reform.

Baucus is trying to balance the goals of finding revenues to eat into deficits while also comprehensively revamping the tax code.

In his State of the Union speech, Obama said, “Now is our best chance for bipartisan, comprehensive tax reform that encourages job creation and helps bring down the deficit.”

The section drew some bipartisan applause, but a few Republican leaders said Obama’s recipe for tax reform was merely tax increases, not the lower rates the GOP believes are essential.

“He said we needed tax reform, but only if it raises taxes,” concluded House Majority Leader Eric Cantor (R-Va.).

Camp, who sat next to Baucus during the speech, put a more positive spin on the president’s expressed support for “comprehensive” reform.

“It was an important statement that tax reform be comprehensive for both individuals and businesses,” Camp said. “That was an important point that he made, and I welcome that.”