Domestic Taxes

Tax-writers say case for reform grows

The top two tax-writers on Capitol Hill say the case for tax reform has been strengthened by the recent revelations about Apple’s tax tactics and the Internal Revenue Service’s targeting of conservative groups.

{mosads}Senate Finance Chairman Max Baucus (D-Mont.) and House Ways and Means Chairman Dave Camp (R-Mich.) are looking to marshal support on and off Capitol Hill with a populist pitch meant to appeal to the regular workers they say could be helped the most by a tax code rewrite. 

Apple’s ability to pay minimal taxes on billions of dollars stashed offshore, they suggest, shows that the code is stacked against those who can’t afford high-priced lobbyists or accountants. 

“If Apple isn’t a case for tax reform, I don’t know what else is,” Camp told reporters last week. “Apparently, every thing they did was legal. But that means we need to take a look at our tax laws.”

Meanwhile, the IRS controversy shows the need to give it less discretion, Camp said. 

“It shows the need for reform,” Baucus said, when asked about the IRS and Apple. 

The pitch from the tax-writers comes as Finance continues to meet regularly to plot a path forward on reform, and after Ways and Means concluded its working group process. 

Both chairmen have said that a tax overhaul will be a heavy lift given differences between the two parties on whether reform should raise more revenue for the government. 

The IRS news has pushed reform to the backburner, with the two panels investigating the IRS’s treatment of groups seeking 501(c)(4) status even as they try to push ahead on tax reform. Lawmakers are also grappling with how to deal with plummeting deficit numbers, which are delaying the sort of budget deadlines that could help spark reform. 

Camp and Baucus began their outside the Beltway outreach even before the IRS uproar erupted, with a new website and Twitter feed that would allow them to get input from across the country. 

An aide to Baucus said the chairmen were still formulating how to best utilize the Apple and IRS cases, as they push for a simplified code that they say would lead to more jobs and less time on compliance. 

The populist approach embraced by Baucus and Camp is reflected in a Twitter page that calls them “Max and Dave” and in recent potshots taken at lobbyists. 

K Street veterans say they understand — and aren’t bothered by — the tax reform rhetoric, even as they’re unsure whether the tax-writers’ tactics will be successful in the end. 

“If you can’t stand the heat, get out of the kitchen,” said Ken Kies, a top GOP tax lobbyist and managing director of Federal Policy Group. “I’m sure they weren’t talking about me, so I won’t take it personally. But that’s fair game, and I think that’s their part in trying to generate interest.” 

Still, several lobbyists said that they would warn their clients against taking part in Camp and Baucus’s new effort. One Republican tax lobbyist said overindulging on tax reform emails and tweets could anger Capitol Hill.

“Let’s say the Realtors asked their 40,000 members to write in and say, ‘Yes, let’s do tax reform but protect the home mortgage interest deduction.’ It would be pretty clear that’s an Astroturf effort and piss off your friends on the Hill,” said the lobbyist. “But that doesn’t mean others won’t do it.” 

For lawmakers, the populist message gives them another chance to explain to regular voters why tax reform is needed and a good idea — an area where members in both parties say they haven’t always been successful.

Tim Cook, Apple’s chief executive, could actually end up feeding that message after telling a Senate panel last week that the issue was less his company’s tax planning and more the broader need for reform.

“I think it’s very clear that you need reform,” Rep. Richard Neal (Mass.), a senior Democrat on House Ways and Means, told The Hill. “It is naïve to think that people are not going to take advantage of items that are in the code, in terms of exemptions, deductions and exclusions.” 

Using the IRS scandal as a catalyst for a tax rewrite could be more of a challenge, 

Some Democrats have questioned whether the laws and regulations guiding tax-exempt groups are clear enough, with others saying that the IRS shouldn’t be allowing any political groups to become 501(c)(4)s. 

But Republicans have stressed that, even though the current code is a mess, that wasn’t what led to the IRS targeting. 

“Regular people get the IRS abuse and discrimination real quickly. They don’t think it’s an issue of clarity in the law. They think it’s unconscionable conduct by the IRS,” said Rep. Kevin Brady (Texas), a senior Republican on Ways and Means. “But certainly, it drives the issue to the forefront — which is, let’s talk about the code. That might be helpful.” 

Tags Kevin Brady Max Baucus
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