Tax reform keeps lobbyists busy, lawmakers expect little progress

Lobbyists have begun collecting tens of thousands of dollars in fees from corporate clients in anticipation of a battle over tax reform this Congress.

But some lawmakers and senior aides are skeptical there will be any comprehensive tax reform package this year, apart from negotiations to raise the national debt limit.

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A senior Senate GOP aide said the debt-limit talks being led by Vice President Joe Biden are “taking up all the energy and it takes a lot of energy to do tax reform.”

Republican leaders have declared tax reform and tax increases “off the table” in the Biden talks.

“An area where there is widespread agreement that we need to tackle is comprehensive tax reform, that cannot be done between now and August. There are all kinds of both intended and unintended consequences attached to comprehensive tax reform,” Senate Republican Leader Mitch McConnell (Ky.) told reporters last month.

He went on to say, “There will be no tax increase in connection with raising the debt ceiling.”

Rep. Sandy Levin (Mich.), ranking Democrat on the Ways and Means Committee, said tax reform won’t be possible if Republicans rule out tax increases.

Levin predicted it would be difficult to accomplish individual or corporate tax reform before the end of the year.

“Republicans would have to agree that revenues are on the table,” he said.

Lawmakers and aides who spoke to The Hill said it will be near impossible to accomplish tax reform in 2012, a presidential election year.

“If it doesn’t happen this year, it certainly isn’t going to happen next,” said Senate Budget Committee Chairman Kent Conrad (D-N.D.).

This is why Conrad and other senior Democrats are pushing for tax reform to be included in the deficit-reduction agreement that will accompany an increase in the debt ceiling.

He argues that Congress could lower income tax rates and reduce the deficit by closing some of the many niche tax breaks that account for $1.1 trillion in lost revenue each year, or $15 trillion over ten years.

“If you just took a fraction, you could have the revenue to buy down rates to help America to be more competitive and to reduce the deficit,” Conrad said.

Democrats are also looking at ending special tax breaks to pay for infrastructure spending they say is necessary to jumpstart the sluggish economy.

On Thursday, Conrad suggested a $100 billion infrastructure package could be paid for by eliminating offshore tax havens.

While broad tax reform is given little chance of passing this Congress, the targeted tax reforms suggested by Democratic leaders including Conrad have helped lobbying firms charge big fees in the first quarter of this year.

Akin Gump Strauss Hauer & Feld represented at least nine clients on the issue of tax reform in the first quarter, according to disclosure reports filed with the Secretary of the Senate’s office of public records.

Alpine Group has represented at least five clients on tax reform so far this year, not including BP America, which it represented on legislation to end tax subsidies for major oil companies, according to public records.

House Budget Committee Chairman Paul Ryan (R-Wis.) unveiled a budget blueprint earlier this year that called for cutting the top individual income and corporate rates from 35 percent to 25 percent.

But Levin says Congress is still a long way from putting together any detailed plans to reform the code.

“In terms of discussion, there haven’t been any,” Levin said. “The only thing we have from Republicans is 25 percent without indicating at all how we get there on corporate or individual. There is no plan. There is a number.”

A senior Republican Senate aide said there have been no substantive tax reform negotiations in the upper chamber either.

The aide predicted that Senate Finance Committee Chairman Max Baucus (D-Mont.) would proceed with hearings on the subject but wouldn’t take up any heavy lifting soon.

Baucus said in an interview after President Obama’s State of the Union speech this year that he did not expect a comprehensive tax reform package this year.

He said he was hopeful that lawmakers might be able to put together a reform plan in time for next year.

Bernie Becker contributed to this report.