Tax writers take reform show on the road

The top two tax writers in Congress on Monday began a national road show intended to build support outside the Beltway for tax reform.

Senate Finance Committee Chairman Max Baucus (D-Mont.) and House Ways and Means Committee Chairman Dave Camp (R-Mich.) stopped by 3M, a Fortune 500 manufacturer headquartered in Minnesota that has suggested it would give up tax breaks for a lower corporate rate.

Camp and Baucus also visited Baldinger Bakery in the first of a series of trips they say would allow people and businesses across the country to give direct input on what they’d like to see in a rewritten tax code.

{mosads}The visit had all the trappings of a presidential campaign stop, as the chairmen sat down with workers from both companies to discuss how a tax overhaul can boost both job and wage growth. They also toured 3M’s innovation center.

“Our tax code today contains nearly four million words and is riddled with loopholes that are acting as a brake on our economy. We have an opportunity to change all that,” Baucus and Camp said in a joint statement. 

“Tax reform can make the code simpler and fairer for America’s families and businesses and spark a more prosperous economy.”

The visit to the Minneapolis-St. Paul area is just the latest attempt from the two tax chairmen, both of whom are scheduled to give up their gavels in 2015, to expand the constituency for reform outside of Washington and recreate the conditions that spurred the last successful rewrite of the code in 1986.

Baucus, along with his panel’s ranking Republican, Sen. Orrin Hatch (Utah), has unveiled a so-called “blank slate” approach that calls on senators to go to bat for their favored tax breaks by July 26.

Baucus and Hatch’s announcement last month raised the tension on K Street, setting the stage for a monthlong lobbying frenzy by companies and lobbyists who have an enormous financial stake in the tax code.

Camp, meanwhile, has vowed to pass a tax reform measure out of his committee this year and has sat down with House tax writers on both sides of the aisle to discuss the path forward.

The two tax writers have yet to announce where else they will visit this summer, but launched a new website and Twitter feed in May that are intended to drum up interest.

Coalitions of corporations — among the country’s more vocal backers of tax reform — applauded Monday’s trip as a sign that real energy was behind the push for tax reform.

But with a fight over the debt ceiling potentially still months away, Baucus and Camp’s efforts underscored the challenge that tax reform faces in capturing the full attention of a gridlocked Congress and the White House.

House Republicans, for instance, are consumed with work on immigration reform, an issue that just last month prompted a rally of Tea Party activists outside the Capitol.

Lawmakers are also expected to grapple this month with a now-doubled interest rate for new student loans and the farm bill, while the tax committees and other congressional panels are continuing their investigation into the IRS’s targeting of groups seeking tax-exempt status.

Baucus and Camp’s trip to Minnesota also illustrated several of the tough choices lawmakers will face as they get deeper into the tax reform thicket.

3M, one of those corporations pushing for tax reform, suggested to Ways and Means this year that it could even get on board with a tax reform plan that scrapped some preferences the company utilized.

The manufacturer, which had $30 billion in worldwide sales in 2012, asked that Congress lower the corporate tax rate to 25 percent and shield offshore corporate income from U.S. taxation, dubbed a “territorial system.”

Camp and other Republicans have backed shifting to a territorial system, but many Democrats remain skeptical.

Both parties, in order to come together on a tax reform deal, would also need to bridge the gap on whether an overhauled tax code would raise more revenue than the current one.

3M is a member of the LIFT America Coalition, one of several corporate coalitions pressing Washington for tax reform.

LIFT America, whose top priority is shifting to a territorial system, called Baucus and Camp’s visit to Minnesota “a positive step forward in the effort to overhaul our tax code and enact the competitive tax rates and modern international tax system needed to place the U.S. on a level playing field in the global marketplace and grow our economy here at home.”

Baldinger, a bakery started in the 19th century that supplies to McDonald’s and Arby’s, also takes advantage of the New Markets Tax Credit — a preference that seeks to generate investment in lower-income areas and has the support of tax writers like Sen. Charles Schumer (D-N.Y.), Rep. Richard Neal (D-Mass.) and Rep. Jim Gerlach (R-Pa.).

Steve Baldinger, the bakery’s president, praised the tax incentive in a statement released by the New Markets Tax Credit Coalition, saying the tax break allowed the company to stay in St. Paul and provide for its employees.

“I encourage Chairmen Baucus and Camp to recognize and protect tax incentives like the New Markets Tax Credit that promote economic growth, strengthen American businesses and create jobs,” Frank Altman, a member of the coalition’s board of directors, said in a statement.