Tax Analysts Blog

Paul Ryan Punts on Tax Reform

Posted on Oct 28, 2015
At first glance, Paul Ryan had a lot in common with his predecessor as House Ways and Means chair. Like Dave Camp, Ryan said he was very serious about moving a tax reform package. Like Camp, Ryan promised to make the tough choices for a revenue-neutral package that would make the United States more competitive. And also like Camp, Ryan spoke in a way that made it clear he understood the legislative complexities of moving a major tax plan through the House and Senate. But now Ryan is moving on to become speaker, and tax reform might be in a worse spot than it was when Camp's H.R. 1 went over like a lead balloon.

For those with short memories, Camp worked very hard on tax reform. Once Republicans retook the House in 2010, the Michigan Republican began engaging with all of his committee colleagues and his counterpart in the Senate, Democrat Max Baucus, chair of the Finance Committee. Camp put out drafts that showed he was serious about base erosion and tackling the individual side (something observers were skeptical could be done). The two chief taxwriters even went on the road, traveling to various locations around the country to build support for their efforts.

It didn't work. When Camp unveiled his comprehensive reform draft (later introduced as H.R. 1) in early 2014, it failed to receive any significant support, even from his fellow Republicans. Ryan, Speaker John Boehner, and the Senate GOP complimented his efforts but not the details of the plan. Democrats claimed to have been left out of the final process after a few bipartisan meetings and ultimately had few good things to say about Camp's draft. So Camp's grand effort came to very little, and he retired from Congress in 2014, possibly because GOP leaders wouldn't let him stay on as Ways and Means chair.

Enter Ryan. Ryan had been Budget Committee chair before taking over Ways and Means, and his ambition to be the House's lead taxwriter may have played a role in Camp's retirement. Ryan pledged to succeed where Camp failed. The new Ways and Means chair, who had described Camp's plan as "flawed," continued to pledge throughout the year that he would confront reform and that 2015 was a window for success.

But Ryan didn't really do all that much to get his reform effort going. He didn't reach out to Democrats the way Camp had done. He didn't coordinate with the Senate Finance Committee. He didn't put out drafts. While it's difficult to know what Ryan was doing behind the scenes to draft a plan, he certainly hasn't accomplished much of anything in the public eye. Maybe Ryan discovered that this tax reform business is hard. Camp's pay-fors were controversial (he would have scaled back several deductions, including for advertising and home mortgage interest, while also introduced tough base erosion options on the corporate side), but any revenue-neutral plan is going to force lawmakers to make tough choices. When Ryan was budget chair, his proposals always seemed to skirt around the unpleasant details. It's hard to do that in a tax plan (just ask Camp and Baucus).

And now Ryan is gone. He will almost certainly be the next speaker of the House, taking over the leadership of a fractured caucus and trying to prevent House Republicans from doing any more damage to their party's chances of winning the White House in 2016.

Some are saying that as speaker, Ryan might be able to make tax reform even more of a priority (Boehner never seemed to care about it), but that's simply not realistic. The speaker's job is to pass legislation drafted by others. It's to keep legislative business going. Ryan isn't going to have time to put together his own H.R. 1. But maybe after nine months as Ways and Means Chair showed him how hard Camp's job was, a small part of him is breathing a sigh of relief at handing the banner of tax reform to someone else.

Read Comments (1)

edmund dantesOct 28, 2015

"any revenue-neutral plan is going to force lawmakers to make tough choices"

Not really. Just start touching the untouchables for the first time. Eliminate
non-profit status entirely. Tax everyone, including hospitals, churches and
schools, under a common regime of low rates and a broad base. Start to tax
those multi-billion dollar endowments and foundations for the first time. As a
bonus, start to tax muni bond interest for the first time.

These steps would hit the 1% where it counts, and they would raise plenty of
money for tax reform, if politicians are serious. But they probably aren't.
And they couldn't trust the current IRS to implement any tax reform fairly

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