At hearing, supercommittee members display eagerness to tackle tax reform

Supercommittee members from both parties called for lower corporate tax rates on Thursday, raising hopes that the deficit-cutting panel could tackle tax reform.

But the latest hearing of the Joint Committee on Deficit Reduction also featured the partisan squabbling over taxes that has repeatedly derailed deficit negotiations this Congress.


“We should seize the opportunity and correct this for the sake of both bringing in more revenues through economic growth and addressing our jobs crisis at the same time,” said Rep. Jeb Hensarling (R-Texas), one of the supercommittee’s co-chairmen. 

Republican and Democratic leaders have backed the basic idea of scrapping tax credits and deductions to help pay for lower tax rates.

Still, Republicans have steadfastly opposed using fresh revenues to eat into deficits, and the six GOP members of the supercommittee showed no signs of backing down from that stance on Thursday.

Democrats on the panel continued to press for using what they call a “balanced approach,” or using both revenues and spending cuts, to reach their mandate of $1.5 trillion in savings over a decade.

“I think it’s unfair that wages are often taxed at a higher rate than investments,” said Rep. James Clyburn (D-S.C). “I think it’s unfair that the wealthiest among us get the most tax breaks.”

President Obama this week urged the supercommittee to revamp the tax code in a way that would pour hundreds of billions of dollars into deficit reduction.

Supercommittee members have two months — until Nov. 23 — to unveil their recommendations, with the federal budget facing across-the-board cuts if they can’t craft a $1.2 trillion deficit-reduction package that passes Congress.

That time crunch has left some observers skeptical that the supercommittee could pull off a full-scale overhaul of the tax code. 

House Speaker John BoehnerJohn Andrew BoehnerDemocrats eager to fill power vacuum after Pelosi exit Stopping the next insurrection Biden, lawmakers mourn Harry Reid MORE (R-Ohio) and other officials have suggested that the panel could instead establish a framework for reform that policymakers could build on.

Thursday’s hearing also underscored the difficulty supercommittee members would have in reaching a tax reform agreement, as the panel’s 12 members often talked more generally about the tax breaks that would need to be eliminated in an overhaul.

Republicans on the panel voiced frustration that official budget rules would not take into account economic growth caused by tax changes. And Democrats noted that, because of tax breaks, many corporations already pay far less than the top 35 percent rate. 

But Democrats like Sen. Patty MurrayPatricia (Patty) Lynn MurrayThese Senate seats are up for election in 2022 CDC leader faces precarious political moment Schumer ramps up filibuster fight ahead of Jan. 6 anniversary MORE of Washington, the panel’s co-chairwoman, and Republicans like Rep. Dave Camp of Michigan also agreed with Thomas Barthold of the Joint Committee on Taxation that policymakers should look to revamp the corporate and individual codes together.

Barthold, the sole witness at the more than three-and-a-half-hour hearing, signaled that comprehensive reform was needed because many businesses — the so-called pass-through entities — pay taxes on the individual code.

“As we compare around the world, we need to understand that,” added Camp, the chairman of the House Ways and Means Committee. 

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 — the chairman of Senate Finance, Congress’s other tax-writing committee — stressed how complicated and time-consuming the tax reform process would be.

Baucus also noted that, while some panel members might be against having the tax code pick winners and losers, some industries also created more jobs than others. 

“It’s important to think through what the intended consequences are to try to avoid some of the unintended consequences,” the Montana Democrat said. 

But others on the panel were more gung-ho.

“The most pro-growth thing we can do is to fundamentally reform our tax code,” said Sen. Pat Toomey (R-Pa.).

This story was posted at 1:55 p.m. and updated at 7:27 p.m.