Revenue collection could be barrier in tax reform talks

Lawmakers from both parties commended President Obama for calling for tax reform during his State of the Union address. But there was less consensus on the president’s assertion that a revamp of the corporate tax code should be revenue-neutral.

Democrats applauded the president for that stance, while Republicans reiterated a point they’ve made previously: that it’s more important for a tax code overhaul to allow businesses to be more competitive than to break even initially when it comes to revenue. 

Rep. Sandy Levin (D-Mich.), the ranking member of the House Ways and Means Committee, said that the administration had made it clear in discussions that it believed a tax reform measure should not add to the national debt. 

“Do it in a way that doesn’t increase the deficit and do it in a way that gets rid of what doesn’t help competition,” he said. 

But Republicans — as Rep. Kevin Brady (R-Texas) put it — said crafting a revenue-neutral plan would be a “challenge.” 

“We actually need a lower tax rate, rather than just rearranging the complicated code we have,” said Brady, a senior member of the Ways and Means Committee.

For his part, Sen. Rob Portman (R-Ohio) made a similar point, saying that forcing a tax-reform package “to be revenue-neutral takes away some of the very benefit you would get from serious tax reform on the corporate side — which is to make our code more competitive by lowering the cost of doing business in America.”

Levin, meanwhile, was skeptical of the GOP argument: “I’ve seen that movie before,” he said. 

Republicans and Democrats on the Ways and Means panel also sparred over how much revenue should be collected in reform legislation during a hearing last week.