Baucus to rev up tax reform efforts

Senate Finance Chairman Max Baucus (D-Mont.) said Thursday that he plans on releasing more thorough proposals on tax reform within two weeks, as he tries to give a jolt to stalled negotiations over rewriting the code.

Baucus told reporters that he had yet to determine which discussion draft on tax reform would come first, and that he would continue his efforts to make the process bipartisan in the Senate.

But officials both on and off Capitol Hill expect a plan on the international tax system for corporations to be among the chairman’s first efforts.

Baucus said Thursday that he thought the discussion drafts would be the best way to generate momentum for tax reform.

“We’ll be going slowly toward more detail with different publications,” the Montana Democrat said. “We’re starting out more general.”

By releasing discussion drafts, Baucus would be seeking to bring attention back to tax reform, after this month’s fiscal fights overshadowed his goal of comprehensively revamping the code.

Both Baucus and his House counterpart, Ways and Means Chairman Dave Camp (R-Mich.), have made tax reform their overriding goal, with neither scheduled to hold their committee’s gavel next Congress.

But showdowns over the debt limit and funding the government also underscored, once again, the deep differences between Democrats and Republicans over whether a budget deal should raise more revenue.

That gulf has left many in Washington skeptical that Baucus and Camp will be able to push tax reform over the finish line, with congressional leaders like Senate Majority Leader Harry Reid (D-Nev.) showing lukewarm — at best — interest in a full-scale rewrite.

Camp has insisted for months now that he plans to push a bill through his committee at some point this year. Baucus laid out a similar timeline this summer, before saying in recent weeks that he hoped to release discussion drafts before year’s end.

Finance Democrats said Thursday they had received little detail on what the discussion drafts would look like, or when they would be released.

“I think drafts are the way to go,” Sen. Ben Cardin (D-Md.) told reporters on Thursday. “We’ll look at specific language. But I think right now, it’s more useful to talk about discussion drafts.”

Baucus – along with Finance’s ranking Republican, Sen. Orrin Hatch (Utah) – already circulated option papers on tax reform starting this March, and it’s unclear how the new discussion drafts will move the process forward.

Those papers laid out potential paths that tax writers could chose in reforming the code, without making concrete proposals.

But it would make some sense for Baucus to concentrate on the corporate side of the code with his early draft discussions.

Republicans and Democrats have so far found more agreement on how corporations should be taxed than individuals, with President Obama’s administration showing far more interest in business tax reform.

Camp also included some White House proposals in a draft on international corporate reform, and Treasury Secretary Jack Lew said at his confirmation hearings in February that he thought the two parties could work together on the issue.

Still, the two parties do have some significant differences when it comes to how corporations’ offshore income should be taxed.

Many Democrats are skeptical of the so-called “territorial” system that Republicans want to employ, which would limit U.S. taxation of what corporations make outside of the country.

Democratic lawmakers have also called on cutting tax breaks that encourage companies to shift resources abroad to help reduce the deficit or roll back sequestration cuts.

“We ought to be looking at having kind of a minimum worldwide tax rate where we’re trying to level the playing field,” Lew said when asked about shifting to a territorial system at his confirmation hearing.

“We actually have a debate between whether we go one way or the other, and we have a hybrid system now. It’s a question of where we set the dial.”

At the same time, even some congressional tax writers have said they see tax reform as a long shot in the current Congress, especially given the revenue divide.

“My view has always been that it’s hard to do comprehensive tax reform without a budget agreement that is more comprehensive than just getting through this budget year,” Cardin said. “I think it’s going to be extremely challenging to do broad-based tax reform.”

Cardin also suggested that he saw more twists and turns along the way for tax reform. 

“I’m never surprised by my chairman,” the Maryland Democrat said Thursday.