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Blue Dogs Unveil Reform Plans, Offer Terms on Bipartisanship

Posted on October 5, 2017 by Stephen K. Cooper, Dylan F. Moroses

A group of House Democrats set terms for working with GOP lawmakers on tax reform, but cautioned that their goodwill would evaporate if Republicans exclude them from ongoing negotiations.

The Blue Dog Coalition, a group of 18 fiscally conservative lawmakers, unveiled their principles for tax reform October 4. Rep. Jim Costa, D-Calif., the group’s co-chair, said the Blue Dogs favor a bipartisan tax reform process that avoids the fast-track budget reconciliation maneuver.

Costa said the Blue Dogs want to simplify the tax code while protecting tax incentives used by middle-income citizens, including the earned income tax credit, state and local tax deductions, the child tax credit, and mortgage interest deduction.

According to an explanation of the group’s tax principles, the Blue Dogs want to level the playing field between domestic and multinational companies, strengthen anti-base-erosion rules, and permit corporate repatriation that sets an adequate taxation rate for cash and working assets held overseas.

Despite the group’s overture to House Republicans, Costa and others made it clear that they would not provide cover for GOP tax reform proposals developed in secret without their input. Costa added that House Republicans will not win Blue Dog support in exchange for adding a few tax provisions favored by Democrats.

Rep. Henry Cuellar, D-Texas, said Democrats refuse to be “props” for GOP lawmakers. “We are not potted plants,” added Ways and Means Committee member Mike Thompson, D-Calif.

Later, the Blue Dogs met with Ways and Means Chair Kevin Brady, R-Texas, who said the group was genuinely interested in middle-income tax cuts and expanding the economy. “They want to make sure that tax reform is balanced within the budget and that tax relief is shared,” Brady told Tax Analysts. “I think there’s a lot of common ground, but also they want a fair process where they can be part of these discussions.”

Other House Democrats were less conciliatory.

“American people don’t want to cut taxes for those at the top again and pay for it with cuts to their Medicare and Social Security and their education,” Lloyd Doggett, D-Texas, the House Ways and Means Tax Policy Subcommittee ranking minority member, told an audience during a Congressional Progressive Caucus event on the Republicans’ tax proposal. “The future of this bill depends on how quickly the truth can catch up with the lies.”

Doggett pointed to recent reports that nearly 80 percent of the benefits under the GOP tax framework would go to those with incomes of more than $730,000 a year, and that President Trump could stand to receive over $1 billion in benefits per year from the proposal.

He also stressed the importance of seeing Trump’s tax returns, highlighting his latest effort to request them during an unrelated Ways and Means markup on a Medicare-related bill earlier that day.

Follow Stephen K. Cooper (@ScoopOnTaxes) and Dylan F. Moroses (@DMoroses3244) on Twitter for real-time updates.