Congress, K Street in tax reform 'purgatory'

Congress, K Street in tax reform 'purgatory'
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Lawmakers and lobbyists are starting to feel burnt out by tax reform talks that have been stalled for years, and appear unlikely to bear fruit anytime soon.

Serious tax reform discussions are now into their fifth year. With a presidential race already heating up, many say those talks will likely spill into at least year seven before the tax code can be overhauled.

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“I start off a confirmed skeptic,” said Senate Minority Whip Dick DurbinDick DurbinRepublicans seek to lower odds of a shutdown No. 2 Senate Democrat opposes Trump's Supreme Court pick The Hill’s Whip List: 32 Dems are against Trump’s Supreme Court nominee MORE (D-Ill.), who was first elected to the House in 1982. “Tax reform has occurred so seldom in the time that I’ve served in the House and the Senate, the stars really have to line up. And the stars aren’t lining up on much around here lately.”

That frustration has found its way to K Street as well, with lobbyists saying they’ll have to remain vigilant over the next two years even with little prospect for success.

“People are stuck, and while it might not be one of Dante’s layers of hell, it’s at least purgatory,” said one former GOP aide and current tax lobbyist.

In the meantime, congressional tax writers are falling back on familiar methods as they try to create a sequel to the 1986 tax reform law, like hearings on well-discussed tax issues and breaking into smaller groups to examine specific parts of the system.

Senate tax writers are convening their working groups even as they acknowledge Democrats and Republicans remain divided over tax reform’s most central issues, and as the partisan rifts in the chamber have undercut even seemingly noncontroversial measures like an anti-sex trafficking proposal.

Finance Chairman Orrin HatchOrrin HatchGOP senator to Dems: 'What's all the whining about' on Supreme Court? Trump, time to end outsourcing ... at the IRS Hatch: I may retire if Romney runs to replace me MORE has said he views those working groups, which the House also used in 2013, as a way to give a jolt to the tax reform process on Capitol Hill. But the Utah Republican, who’s only held the Finance gavel for two months, hasn’t been shy about expressing frustration with tax reform’s sluggish pace.

“I have to admit, I'm getting tired of hearings,” Hatch told reporters on Tuesday, just after Finance discussed the need to simplify the tax code and ahead of a hearing on international provisions.

“We’ve had 30 now, and I’ll say it again. I think we’ve had enough hearings,” Hatch added, insisting that Finance has to “sit down and start doing what has to be done. And we’re going to do that.”

The year started more promisingly for tax reform advocates, with both President Obama and GOP leaders on Capitol Hill maintaining the issue was one of just a handful, along with trade and infrastructure, where there was a chance for bipartisan success over the next two years.

Obama gave those working on tax reform more reason for hope in February, by proposing a 19 percent minimum tax on future global earnings for corporations in his budget. The business community and Republicans both found that rate too high, but applauded the White House for fleshing out their proposals for tax reform.

But Republicans contend that the White House hasn’t made any serious overtures on taxes in the weeks since the budget rollout. “We’re just talking to ourselves,” said Senate Majority Whip John CornynJohn CornynSenate Dems: Border wall is a budget 'poison pill' Senate braces for fallout over Supreme Court fight Former congressman indicted on conspiracy charges MORE (R-Texas).

The Senate’s second-ranking Republican, who’s also on the tax-writing Finance panel, added that he thought the working groups would help the prospects for tax reform – just maybe not anytime soon. “I think all this work is work that needs to be done at some point, anyway,” he said. “So hopefully we can bank that, and then use it at some point.”

For their part, Democrats have noted that potential GOP presidential candidates like Sen. Marco RubioMarco RubioRepublicans giving Univision the cold shoulder: report Week ahead: Senate panel to vote on Trump's Labor pick Senators introduce new Iran sanctions MORE (R-Fla.) are already rolling out tax reform frameworks, some 20 months before the November 2016 election. 

Nonpartisan analysts have said that the plan from Rubio and Sen. Mike LeeMike LeeWhat are 'religious liberty' bills really about? Lee: Nuclear option justified after Dems used it in 2013 The Hill's 12:30 Report MORE (R-Utah) would add as much as trillions to the federal debt over a decade, and even senior Republicans like Hatch say those sorts of proposals complicate tax reform efforts on Capitol Hill.

More generally, House Ways and Means Chairman Paul RyanPaul RyanPoll: Republicans blame Congress, not Trump or Ryan, for ObamaCare failure Paul Ryan sells out conservatives with healthcare surrender GOP lawmaker calls for select committee on Russia MORE (R-Wis.) has said that the presidential election will push the deadline for tax reform for this Congress up to this summer.

But it’s also true that Democrats and Republicans haven’t been able to bridge the most fundamental of tax reform divides since former Senate Finance Chairman Max BaucusMax BaucusGOP hasn’t reached out to centrist Dem senators Five reasons why Tillerson is likely to get through Business groups express support for Branstad nomination MORE (D-Mont.) and former House Ways and Means Chairman Dave Camp (R-Mich.) started pushing the issue following the 2010 elections.

The two parties, for instance, still don’t see eye-to-eye over whether a tax overhaul should raise new revenue for the Treasury. Republicans have said they’re willing to discuss Obama’s preference of just revamping the tax code for businesses, but have also made it clear they’d prefer to take a more comprehensive approach. 

And the two sides have even expanded their fight over how analysts should score tax bills, with the House GOP implementing new rules this year mandating more “dynamic” scoring that tries to account for economic growth.

On top of that, analysts stress that Washington’s tax reform task is tougher now than it was almost three decades ago, when former President Reagan and a divided Congress enacted the last major rewrite of the tax code. Camp underscored that problem just over a year ago, when he rolled out a tax reform draft that got underwhelming reviews from across the ideological spectrum.

“I think it took two or three years to get the 1986 bill from an idea to legislation. So it takes a while,” said Sen. Rob PortmanRob PortmanMcCaskill investigating opioid producers Overnight Finance: Senators spar over Wall Street at SEC pick's hearing | New CBO score for ObamaCare bill | Agency signs off on Trump DC hotel lease GOP senators offer bill to require spending cuts with debt-limit hikes MORE (R-Ohio), a member of the Finance panel.

“Frankly,” Portman added, “we’ve had a while.”

Sen. Sherrod BrownSherrod BrownSenate Dems call for investigation of acting SEC chairman Dems wait for GOP olive branch after ObamaCare debacle Path to 60 narrows for Trump pick MORE (D-Ohio), another tax writer, said he was more optimistic about the tax reform working groups, which are supposed to offer recommendations within a few months. But underscoring the challenge the groups face, Brown also insisted that some of the broader goals of tax reform advocates – like lowering the corporate tax rate – felt out of reach. 

“If each working group comes forward with some bipartisan agreement, we have at least some elements of tax reform,” Brown said.

“And that may be the best we can do.”