Schumer: Tax rates fine where they are

Sen. Charles Schumer (D-N.Y.) said Thursday that Democrats in the upper chamber largely oppose reducing individual tax rates, in just the latest obstacle placed before the Finance Committee’s efforts on tax reform.

Finance Committee Chairman Max Baucus (D-Mont.) has said that both individual and corporate rates need to be slashed as part of a rewrite in the tax code and has been working with lawmakers in both chambers to achieve that goal.

But Schumer told reporters that Democrats had battled for years to win the increase in tax rates on the highest earners — from 35 percent to 39.6 percent under the “fiscal cliff” deal — and have no interest in handing back those gains.

“I don’t think we should lower individual tax rates. And I think the overwhelming majority of our caucus agrees. Corporate might be different,” said Schumer, a key player in crafting Democratic messaging. “We think 39.6 is about the right rate. We fought long and hard to get it.”

Baucus and House Ways and Means Committee Chairman Dave Camp (R-Mich.) have both made revamping their 4 million word tax code their top goal in the current Congress.

{mosads}But both Senate Majority Leader Harry Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky.) made clear that they believe that tax reform faces the longest of odds right now, given the divide between Democrats and Republicans. McConnell, in fact, all but declared tax reform dead in the current session of Congress.

Top GOP tax writers like Sen. John Thune (S.D.) said comments like Schumer’s made them even more skeptical that Baucus would have the freedom to push a reform bill through the committee.

Republicans have also said that President Obama’s latest offer — pairing corporate tax reform with increased spending on infrastructure and jobs programs — only hardened the partisan lines on taxes.

Baucus and Sen. Orrin Hatch (Utah), the top Republican on the Finance panel, recently reached out for the rest of the Senate’s ideas on tax reform. Baucus has said that he wants to mark up a bill in the committee this fall, and Camp recently outlined a similar timeline for Ways and Means.

The Finance Committee chairman told reporters that a supermajority of senators had taken part in the “blank slate” process, with more than 1,000 pages submitted. But while Baucus said tax-writing staff would be working hard over the August recess to examine those submissions, he declined to say when a reform proposal might be ready for release.

“It’s determining how pieces fit together,” Baucus said about the committee’s August work. “It depends on our analysis of the submissions. That’s going to have some bearing on when we move, and how quickly we move.”

Baucus has said that tax reform should both raise revenue and reduce rates, and should include both the corporate and individual tax systems.

But the Baucus has also consistently said that the $975 billion in revenue passed in the Senate Democratic budget is too high — and, reiterating what he said last week, that’s exactly the place where Reid said reform negotiations should start.

“Whether we wind up there remains to be seen,” Reid told reporters. “It has to be significant revenue.”

After blasting the GOP for blocking the Transportation appropriations bill, Reid added that he believed those sort of partisan difference would be in place for tax reform as well.

“Unless the Republican party becomes functional again,” Reid said, “we’re here slugging it out about nothing.”

Schumer also said that he thought there was a fair amount of common ground on taxes, even between Democratic leadership and Baucus. “I think what the president outlined got a lot of favorable review from both Sen. Baucus and the Finance Committee,” the New York Democrat said.

Republicans also weren’t too confident about tax reform, with McConnell saying that Obama and the Democrats’ insistence on raising revenue through tax reform had “stymied” the chances for a thorough revision of the code.

GOP lawmakers have also said that Obama’s push to leave out the individual code in tax reform would leave behind the millions of small businesses that pay taxes as individuals.

“Honestly I don’t see how we get there,” McConnell told reporters after a contentious floor vote on an appropriations bill. “It’s pretty clear that the president has even walked away now from the commitment he made to us at lunch that corporate tax reform would be revenue-neutral.”

Thune, meanwhile, seemed surprised that Schumer didn’t have an interest in reducing individual rates. “Wow,” Thune said. “Well, if they’re lockstep on that, what are you looking to say?”

The South Dakota Republican added that the comments on significant revenue from Reid and Schumer were “drowning the whole idea” of tax reform.

“There’s some people who might otherwise be disposed toward the way that we would like to see this approached over there, but I think their leaders are going to crack down on them in a hurry,” Thune told reporters. “And I think you’re going to find very little appetite for doing this in a revenue-neutral way.”