Lawmakers on both sides of the aisle are eager for the Obama administration to release its blueprint for corporate tax reform.
Members said the unveiling of the plan would help move the reform discussion forward into specifics and provide a starting point for congressional action.
“I frankly would welcome any proposal that the administration has on tax reform,” Rep. Dave Camp (R-Mich.), the chairman of the House Ways and Means Committee, told reporters Wednesday. “We’re having conversations. I know they’re looking at things.”
There is wide agreement in Washington that the U.S. tax code, now a quarter-century
removed from its last overhaul, is in dire need of a tune-up. Prominent policymakers in both parties have said they would like to see both the individual and corporate code revamped, but the administration seems to have put more stock in corporate reform.
A corporate tax reform plan would likely bring down the top marginal rate from its current 35 percent level while eliminating loopholes in the IRS code. The goal is to help American businesses become more competitive in the global economy.
But aides and lawmakers cautioned that any revamping of the tax code could be a lengthy process, and Wednesday comments from tax writers in both chambers underscored the challenges of fleshing out a reform package.
Treasury Secretary Timothy Geithner informed a Senate panel last month that his department was working on its own corporate plan, and officials at Treasury have met with stakeholders on the issue in recent months.
Geithner has spelled out some of his goals for a corporate tax overhaul, including reducing the top corporate rate to the high 20s, but an administration official said discussions on the Treasury plan are still ongoing.
“No decisions have been made about the substantive content of any specific reform proposal or the timing or manner in which the administration will push this dialogue forward,” the official said in a statement.
Camp and Rep. Bill Pascrell (D-N.J.), a House Ways and Means member, both said they expect the administration’s plan to be more of a framework than a fully formed proposal.
Members and aides also said that, while an administration outline would certainly propel the corporate tax reform discussion forward, it would be a heavy lift to attach even a framework for reform to a 2012 budget proposal or deficit-reduction measure.
“I don’t know if it can be done by that time,” Pascrell said. “But I think we can begin to talk about it, and I think it will help us get to the goal line.”
“The calendar’s not going to decide when something moves forward,” a House Republican aide added. “The policy’s going to.”
Lawmakers and business representatives have acknowledged that hashing out a corporate tax reform plan would require difficult discussions, including over whether to move toward a system where only corporate profits made within the U.S. would be taxable.
Dorothy Coleman of the National Association of Manufacturers also signaled Wednesday that the administration’s insistence that a corporate tax reform plan break even revenue-wise “handcuffs the process.” Coleman added that her group would prefer to keep and even strengthen certain tax credits and deductions, including for research and development.
On Wednesday, Sen. Max BaucusMax Sieben BaucusThe good, bad, and ugly of Tester's Blackfoot-Clearwater Stewardship Act Biden nominates Nicholas Burns as ambassador to China Cryptocurrency industry lobbies Washington for 'regulatory clarity' MORE (D-Mont.), chairman of the Finance Committee, made a nod toward the challenges of a corporate tax overhaul, saying at a panel hearing that rolling the top corporate rate back to 26 percent would probably require the elimination of even very popular tax credits and deductions, like those for research and development.
Baucus added that was “obviously something that does not make sense,” and noted that officials might have to consider taxing certain large pass-through entities — businesses that are taxed on the individual code — as corporations.
The Finance chairman did not mention a specific figure on that front, but a Washington-area trade group said recently that it was concerned the administration was working on a plan to tax pass-throughs that had $50 million or more in gross receipts as corporations.
For his part, Camp was reluctant to comment on that tax idea Wednesday, noting that he had not seen a specific proposal.
But Camp added, “It’s not something I’d be inclined to consider.”