By Bernie Becker - 07/29/13 10:30 PM EDT
PHILADELPHIA — Congress’s top tax writers sought support for a streamlined code on Monday in a visit that served to highlight the obstacles in their path as much as their ambition.
Senate Finance Committee Chairman Max Baucus (D-Mont.) and House Ways and Means Committee Chairman Dave Camp’s (R-Mich.) second stop in a national barnstorming tour was focused on how to simplify the code for small businesses trying to compete with corporate heavyweights.
“It’s messy. Different people have different points of view,” Baucus told reporters at the end of the stop. “But we’re all headed in the same direction — it’s 'simplify.' It is too God-blessed complicated. Simplify it.”
But while the two small businesses — an appliance retailer in suburban New Jersey, and a Philadelphia outfit that helps facilitate meetings — pleaded for a simpler tax code, they were also just as likely to advocate for the sort of incentives that would be on the chopping block in exchange for lower rates.
And with Baucus and Camp hesitant to delve into specifics yet, the businessmen and women behind Mrs. G TV and Appliances and The Hub Centers for Meeting and Collaboration just as cautiously stepped around questions about what tax breaks they’d be willing to do without.
“I would like for somebody to say: ‘Here’s what we definitely want to do,’ ” said Bill Decker, one of The Hub’s founders. “But I respect that they’re taking a slow and deliberate approach, too.”
“Simplification being the overall theme. We agree,” Decker added. “What does that look like? I don’t know.”
In heading to Philadelphia and Lawrenceville, N.J., Baucus and Camp continued their quest to leverage outside-the-Beltway pressure to force a skeptical White House and a gridlocked Congress to act on their legacy-fulfilling goal of tax reform.
But the skepticism facing Baucus and Camp, each facing the final 17 months of their chairmanship, is also born of real policy differences — especially on the question of whether a rewritten tax code should raise more revenue to reduce deficits.
Even so, both chairmen have pledged to push a reform bill out of committee after the August recess. The two are still seeking suggestions, via Twitter and other avenues, about tax reform, and also met privately on Monday with someone in the Philadelphia area who gave them a submission.
“It’s too soon to draw conclusions,” Camp said. “We’re still trying to make sure that we get the right kind of feedback.”
Both Debbie Schaeffer, the president of Mrs. G, and John New and Decker, the founders of The Hub, said such an effort could even the playing field for them as they battle against big box stores and wealthy hotel chains.
Smaller companies, Baucus said, spend a disproportionate amount of time complying with the tax code — and could also need and deserve the sort of incentives that tax reform seeks to end.
Mrs. G, now approaching its 80th year in business and in its third-generation of female leadership, is located on a busy stretch of New Jersey highway — with, Schaeffer said, more than a half-dozen competitors just within a half-mile or so.
With that in mind, Schaeffer and her accountant, Marguerite Mount, discussed the importance of a provision that allows companies to quickly write off new purchases, with Schaeffer also calling the expensive and popular deduction for mortgage interest important.
The expensing tax break, Mount said, should even be expanded. Mount added that businesses would be more likely to open up about what provisions they could live without if Baucus and Camp more clearly laid out the end game.
“Perhaps somewhere in the area of some of the more softer business expenses you could consider giving up, in exchange for lower rates,” she said.
Schaeffer, meanwhile, told reporters after Baucus and Camp’s visit that she believes corporations have an extra leg up after the “fiscal cliff” deal raised taxes on the highest-earning individuals. Like many small businesses, Mrs. G is a pass-through entity — meaning its owners pay taxes through the individual code.
But before the tax talk, Schaeffer showed Camp the newest in appliance technology, including a microwave in a drawer.
Baucus, who faced travel delays, later browsed kitchen ranges, and both chairmen slurped smoothies made of locally grown blueberries — prepared by Mrs. G’s own chef, who also prepared a frittata made of kale and portobello mushrooms.
More than 30 miles down the road, in a sleek office that overlooks Philadelphia’s main train station and Drexel University, New and Decker said they were competing with international hotel chains like the Four Seasons, the Ritz Carlton and Marriott that have more flexibility in their tax planning.
Decker said policymakers should consider a proposal from President Obama that would give capital gains incentives for investing in start-ups if they want to help small businesses.
Corporations, meanwhile, have pointed out that they face double levels of taxation that pass-throughs can avoid.
Before sitting down with The Hub executives, Camp and Baucus ran into Ed Rendell, the former Democratic governor of Pennsylvania, who urged the two tax writers on in their bipartisan talks. “I can’t tell you how inspiring it is,” Rendell said.
Still, with a potential fight over the debt ceiling looming in the fall, Camp and Baucus made it clear they’re taking a deliberate approach heading into the August recess.
Baucus and the top Republican at Finance, Sen. Orrin Hatch (Utah), are examining tax reform submissions from fellow senators after promising their suggestions would be kept under wraps for 50 years. Camp, meanwhile, is meeting with Democrats on his panel this week to see if a bipartisan agreement can be reached amid the revenue divide.
“Part of what we’re going to have to have is an entire package,” Camp said.