Baucus could release draft tax reform plan in spring
Those efforts come as Baucus’s counterpart across the Rotunda, House Ways and Means Chairman Dave Camp (R-Mich.), recently released his second draft paper on tax reform, and as observers around Washington have grown skeptical that a broad tax revamp can happen any time soon.
Baucus and Camp have a good working relationship, and both have expressed an interest in overhauling both the corporate and individual sides of the tax code – the sort of legacy-making reform that Washington last pulled off more than a quarter century ago.
“Comprehensive tax reform can make the code simpler, fairer and easier to comply with, all of which can lead to families having more time, energy and money for what matters most – their families,” Baucus, Camp and Sen. Orrin Hatch (Utah), the ranking Republican at Finance, said Friday to mark the 100th anniversary of the income tax.
But the Obama administration has so far sounded more open to corporate reform – just one of the roadblocks for tax reform, as Democrats and Republicans continue to spar over whether the wealthy should contribute more revenues for deficit reduction.
As Finance Committee chairman, Baucus has frequently worked across the aisle, as he did on the package of targeted tax breaks that passed the committee last year and was eventually tacked on to the “fiscal cliff” deal.
But getting across-the-board support for drafts on a wide range of tax areas – especially on a panel that ideologically ranges from liberals like Sen. Sherrod Brown (D-Ohio) and Chuck Schumer (D-N.Y) to conservatives like Sens. Pat Toomey (R-Penn.) and John Cornyn (R-Texas) – could prove difficult.
Baucus said last year that, like other Democrats, he thought tax reform should raise more revenue to battle deficits. But the Montana Democrat has yet to say publicly how the roughly $630 billion in revenues from the fiscal cliff deal affects his thinking on that front.
Camp, meanwhile, has said that he is reevaluating how far the top individual rate can be dropped, after the fiscal cliff deal raised it to nearly 40 percent. The House GOP’s budget last year called for a 10 percent and 25 percent bracket, a proposal that Democrats said would force middle-class families to lose key tax breaks like the deduction for home mortgage interest.
The Michigan Republican wants to bring the corporate rate down to 25 percent as well, from its current 35 percent. The White House, in a draft proposal released last year, floated dropping that rate to 28 percent.
Analysts and even some congressional Democrats welcomed Camp’s most recent draft reform proposal, on complex financial instruments.
But Democrats also sharply criticized Camp’s 2011 proposal to shield most offshore corporate income from U.S. taxation, underscoring the partisan divide on many tax issues.