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Tax Reform Consensus ‘About a Week Away,’ Hatch Says

Posted on September 13, 2017 by Asha Glover, Dylan Moroses

The “Big Six” tax reform negotiators are closing in on a consensus plan for tax reform, Senate Finance Committee Chair Orrin G. Hatch, R-Utah, suggested following the group’s September 12 meeting.

The group is “about a week away” from unveiling its plan, Hatch told reporters. When pressed about the specifics, including whether it would be released as an outline or as legislative text, Hatch responded, “I don’t know, we’ll have to see in a week.”

Before the meeting, House Ways and Means Committee Chair Kevin Brady, R-Texas, told reporters that the Big Six was making progress. “We’re working toward a unified plan where the Ways and Means Committee can write and translate that framework into text,” he said, adding that there is “no timetable yet for laying out that framework, except that we always want to do it sooner rather than later. Right now we’re focused on getting the policy right.”

Treasury Secretary Steven Mnuchin, another member of the Big Six, offered some details on what policies negotiators are looking at when he said earlier in the day that a low statutory business rate will not be extended to service companies organized as passthroughs.

The Finance Committee announced the same day that it will hold a hearing on business tax reform September 19. It will be the committee’s second tax reform hearing of the month, following one on individual tax reform scheduled for September 14.

Congressional Republicans also suggested that an additional disaster relief package addressing damage from hurricanes Harvey and Irma would not obstruct their focus on building tax reform consensus. Senate Majority Leader Mitch McConnell, R-Ky., said that while the storms “are bigger than we are customarily [used to] dealing with,” aid will be provided. He also downplayed any connection between the needed money for disaster relief and a desire to pass deficit-neutral tax reform.

“The idea behind tax reform is not diminished revenue but greater growth,” McConnell said.

Brady also said that granting hurricane aid would not threaten tax reform. “While it does take some time, because we want to make sure we get the tax provisions right, you know right now we’re continuing to stay on the timetable on tax,” he said.

Brady reiterated that lawmakers are working to find out what communities need before deciding what will go into an aid package. When asked if that meant an aid package could come in October or November, Brady said that House Speaker Paul D. Ryan, R-Wis., has asked lawmakers to be prepared before then. “We’re consulting with our members and our communities now,” Brady said.

Democrats Push to Be Heard

While Republicans continue holding meetings to nail down the details of their tax reform plan, Senate Democrats are pushing to be included in negotiations on a final bill.

Senate Minority Leader Charles E. Schumer, D-N.Y., said on a September 12 that Democrats are willing to work with Republicans, but only if they agree to the three principles Senate Democrats outlined in an August letter: that the bill not increase the burden on middle-income households or cut taxes for high-income taxpayers; that it not include deficit-financed tax cuts; and that it go through regular order, not reconciliation.

Schumer said the desire of congressional Republicans and President Trump to eliminate the estate tax would violate Democratic principles, citing data released the same day by the Center on Budget and Policy Priorities. “The Republican plan to repeal the estate tax would provide a tax cut for about 5,000 of the richest families in America. That’s approximately . . . 2 percent of the estate owners in this country,” Schumer said, adding that eliminating the tax would not help produce revenue-neutral tax policy.

If estate tax repeal is included in tax reform legislation, all Democrats will likely oppose that provision, Schumer said.

“Repealing the estate tax abandons progressivity,” said Finance Committee ranking minority member Ron Wyden, R-Ore. “Really, we’re talking about helping the top two-tenths of 1 percent,” he said, adding that repealing the estate tax ultimately “translates into higher tax bills for the middle class.”

Schumer also cited reports that Republicans could have their sights set on eliminating the state and local tax deduction and on lowering the cap on the mortgage interest deduction. Schumer said he would oppose any effort to “deal with” either deduction.

Ryan said September 7 that he thinks there is agreement among lawmakers to preserve the mortgage interest deduction.

Looking for Common Ground

Rather than drawing a “red line in the sand” on specific provisions such as the estate tax, it is important to find common ground, Brady said, adding that he has reached out to Democrats in the House to “find out what their priorities [are] and what their ideas are,” and those discussions are continuing.

“I would prefer this be bipartisan tax reform, but really we’re hopeful that Democrats will bring us their ideas and stay at the table. I think there’s some common ground,” Brady said. Even though the Big Six comprises only Republicans, “the policies we’re looking at are just as important to Democratic communities as they are [to] Republican communities,” he said.

Brady highlighted “a strong middle-class tax cut” as something that Democrats have prioritized and that Republicans are open to including in tax reform legislation.  

However, extending a hand across the aisle does not appear to be a concern to some in the Senate.

“Most likely it will get done through reconciliation,” Senate Finance Committee member John Thune, R-S.D., told reporters. “It will be great if it’s done with independent votes, but I don’t know how you get eight Democrats to vote for something.”

David van den Berg contributed to this article.

Follow Asha Glover (@AshaSGlover) and Dylan F. Moroses (@DMoroses3244) on Twitter for real-time updates.