House Republicans huddle to debate 2012 tax strategy

A debate is brewing among senior House Republicans about whether to move forward with a comprehensive tax reform proposal in 2012.

Overhauling the tax code has long been a legislative priority for Speaker John Boehner (R-Ohio), and the chairman of the tax-writing Ways and Means Committee, Rep. Dave Camp (R-Mich.), has spent the better part of a year laying the groundwork for a sweeping tax package.

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But with chances dim for a bipartisan accord in an election year, the party might decide to hold back on advancing a conservative tax vision that could leave its members vulnerable to attack come November.

Lawmakers and leadership aides say the question of tax reform will be one of the principal topics discussed at the annual House Republican retreat in Baltimore, which begins Thursday.

“When we do fundamental reform, we intend to make it the law of the land,” Rep. Kevin Brady (R-Texas), a senior member of the Ways and Means Committee, told The Hill. “How best to do that and when to do that — those are going to be good discussions.”

The decision on tax reform will send a signal about how aggressively the House GOP plan to legislate heading into the election.

As an alternative to releasing and voting on a comprehensive overhaul, Republicans could pursue a more modest program of targeted tax bills to aid small businesses, a GOP aide said.

Some Republicans have compared the decision to the GOP’s move last year to adopt the conservative budget proposal authored by Rep. Paul Ryan (R-Wis.), which endorsed far-reaching changes to Medicare and Medicaid. While party leaders won near-unanimous support from rank-and-file members, Democrats seized on the vote to attack Republicans and won a special-election race that was fought largely over the GOP budget plan.

Rep. Tom Cole (R-Okla.) said the GOP’s experience with the Ryan plan argued in favor of passing a comprehensive tax overhaul.

“Everybody said that was going to be something that killed us. It didn’t. It made us stronger,” Cole said. “We get credit from within our base, and I think from a lot of folks in the media for having had a real plan, when the Senate doesn’t.”

But some Republicans say that comparing the Ryan budget with tax reform is a faulty comparison, declaring that if history is any indicator, an overhaul that weeds out individual provisions likely would be a complicated process requiring support from both parties.

The last major overhaul of the tax code, in 1986, took major efforts from a Democratic House, a Republican Senate and President Reagan’s administration.

“Obviously, we don’t get to decide what tax reform is going to look like alone,” said Rep. Patrick Tiberi (R-Ohio). “So we need a willing partner in the Senate and the White House.

Tiberi, the chairman of a Ways and Means subcommittee dealing with the tax code, also acknowledged that it could be difficult for tax reform to move forward in an election year.

He said President Obama had already started ramping up the rhetoric on raising taxes on high earners — all the while insisting he wanted to find a way for corporate tax reform as well.

“A lot just depends on what type of tone the president sets,” Tiberi said. “And whether [Senate Majority Leader] Harry Reid [D-Nev.] would prefer to have a fight rather than to cooperate and get something done.”

Camp has already released a draft of one prong of a tax overhaul, a proposal to reform international tax laws. He and his Democratic counterpart in the Senate, Max Baucus, have also been working on reforms that would more broadly simplify the individual and corporate codes.

Whether or not a tax reform bill hits the House floor in 2012, Camp says his committee will continue its 2011 work on building a foundation for a tax overhaul.

“I just hope to continue those efforts,” Camp said. “We need to do it in the right way and be smart about it.”

The Ryan budget included the contours of a tax reform plan that had already been endorsed by Camp — reducing both the top corporate and individual tax rates to 25 percent, down from the current 35 percent, while sweeping out some tax preferences.

A complex set of political factors weigh into the House GOP’s decision, perhaps none more important than the presidential election. The party’s nominee will likely have his own tax plan, which could differ from the eventual House plan.

“It does complicate things for the nominee, because they’re going to immediately be asked what they think about our proposal,” Cole said. “And we don’t need a debate with Republicans.”

Boehner last summer tried and failed to negotiate the parameters for a tax overhaul as part of a deficit-reduction package with the president. The Speaker has yet to swear off the possibility of a grand bargain in 2012, but his top lieutenant, Majority Leader Eric Cantor (R-Va.), has publicly and privately pushed the party to set its sights on incremental reforms by focusing on areas of common ground between the two parties, rather than the ideological gulf on taxes. 

A leadership split on taxes emerged late last year, when Cantor pushed for the inclusion of a repatriation proposal in the House GOP payroll tax bill. Boehner and Camp opposed the move, preferring to deal with repatriation as part of the broader tax overhaul.

In addition to the current payroll tax debate, Congress will be forced to confront tax policy in some form by the end of the year, when the Bush-era rates expire.

The chairman of the conservative Republican Study Committee, Rep. Jim Jordan (Ohio), was adamant that the party should detail its tax proposal in advance of the election.

“We have to do it this way. I’m convinced of it,” he said. Rallying behind a GOP tax plan, he said, would be “helping lay the predicate for what needs to happen next year” if the party wins in November.

“We want to win in a way where we’ve told the American people what we need to do to fix the country,” Jordan said.