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Hatch Taps Senate Taxwriters for Reform Ideas

Posted on June 28, 2017 by Asha Glover

A handful of Senate Finance Committee Republicans have been called on to work on specific tax reform issues in the upper chamber, Senate Finance Committee Chair Orrin G. Hatch, R-Utah, said during floor remarks on June 27.

“I have been working to involve all the Republican members of the Senate Finance Committee in this effort,” Hatch said, adding that he has asked Sens. Michael B. Enzi of Wyoming and Rob Portman of Ohio to focus on the international tax system. Hatch said he has asked Portman and Sen. Chuck Grassley of Iowa to look at the individual tax system. “I think most of us here in Congress, and not just on the Republican side, would like to see a tax reform bill that reduces the tax burden on the middle class,” Hatch said.

Sen. John Thune of South Dakota has been assigned to work on the business tax system; Sens. Dean Heller of Nevada and Bill Cassidy of Louisiana have been asked to work on energy tax policy; and Sen. Pat Roberts of Kansas will cover agricultural tax issues, Hatch said. He said that later, he plans to ask other committee members to look into particular tax issues.

Hatch emphasized that despite closed meetings between key players in the Trump administration, House and Senate leaders, and taxwriters, the tax reform process will be open. “We have been discussing tax reform at a high level in an effort to reach some agreement,” he said. “However, while this process may result in an agreed framework, this will not be the be-all, end-all of tax reform.”

Hatch also said that he has contacted Democrats and invited them to participate in tax reform efforts, but they have not been especially willing. “We have heard our colleagues cite a number of reasons as to why they don’t want to work with us on tax reform,” Hatch said, but added that he “is willing to work with anyone, Republican or Democrat, in this effort.”

“If I have my way, this process is going to open, fair, and joint. It will be open and it will be bipartisan,” he said.

Congressional Democrats, however, are saying they've been shut out of the process.

Meadows Bats Down Border Plan

The border-adjustable tax, touted as an integral part of House Republicans’ “A Better Way” tax reform agenda, may not see the light of day, a member of the conservative wing of the House said June 27, casting further doubt on the provision and raising questions about how to pay for other elements in the agenda.

House Freedom Caucus Chair Rep. Mark Meadows, R-N.C., told reporters that politically, the border provision has a long shot of being included in any plan. "We have not taken an official position on the border-adjustable tax,” he said. “The political reality is that I think at this point, we need to look at what tax reform would include without the border adjustment tax. I think that would be prudent, just from a political standpoint. From a policy standpoint, you could argue both for and against it."

Referring to the revenue issues involved, Meadows said, "The biggest thing on tax reform is: will we go with a border adjustment tax? Because that affects everything else from both a revenue standpoint and certainly from a plan standpoint, so I don’t know if we have individual target numbers for that.”

Rep. Dave Brat, R-Va., another Freedom Caucus member, told Tax Analysts there needs to be some consideration on how to address the revenue that is lost without the inclusion of the border-adjustable tax. “That’s a trillion bucks and so now you’ve got a hole, and that’s why we’ve been pushing for this few-hundred-billion-dollar pot when it comes to the budget debate. . . . It has to do with the trillion-dollar, giant-sized jigsaw puzzle pieces and we’ve got to solve that before we go to the small ball numbers.”

Ways and Means Committee member Mike Kelly, R-Pa., told reporters his position on the border-adjustable tax remains the same, that “it’s basically a tax on consumers.”

“I hear it’s dead in the Senate and [everybody] keeps telling me it’s dead,” he said. “But I don’t believe that anything’s dead until you bury it.”

Ways and Means member Kenny Marchant, R-Texas, said the committee is still seeking direction from the White House on whether it will support the border provision. He added that until the healthcare debate is resolved, there will not be much effort to draft legislation or push for support.

“It’s very important to get it done, because it’s backing everything else up,” Marchant said, adding that once they settle the healthcare issue, “then you begin to know what the numbers look like.” He added that the budget resolution would be an important part of setting the stage for tax reform goals because it would set the benchmark numbers for federal spending and savings.

"The real question, and the question I'll be asking is, are we going to be set to have this thing all teed up to go straight to work following Labor Day? And work until we get tax reform done? I mean literally drafting. Are we going to be set by the end of July to be drafting? Will all minds be on tax reform? I don't know the answers to that.”

A Democratic taxwriter speculated on what the border tax’s exclusion would mean for Republicans' reform efforts. Rep. Lloyd Doggett, D-Texas, Ways and Means Tax Policy Subcommittee ranking minority member, said the provision is dead and that it has been for a while. “It creates a billion-dollar hole in their tax reform,” he said. “I’m eager to hear how they plan specifically to fill that hole.”

Doggett said there could be alternatives to the border-adjustable tax, but they probably wouldn’t raise enough revenue to make it “realistic to lower rates as much as they propose, unless you want to borrow from abroad, which I don’t.”

Doggett also said he doesn’t think it’s necessary to finish the budget before proceeding with tax reform. “I think getting a budget resolution is very desirable and I’d like to see one, but I don’t believe that it will really impair what we want on tax reform,” he said.

David van den Berg and Dylan F. Moroses contributed to this report.