Senate Finance Chairman Orrin Hatch (R-Utah) accused President Obama of fostering “class warfare” with the tax policies the president plans to lobby for in his State of the Union on Tuesday.
Hatch, speaking at the U.S. Chamber of Commerce, suggested that Obama’s plan to raise new taxes on the wealthy to help pay for middle-class priorities would undercut bipartisan negotiations over revamping the tax code.
“Sadly, it doesn’t appear that President Obama gets it,” Hatch said, insisting the White House was merely “using language typically associated with tax reform.”
Before his new proposals, Obama had shown far more interest in negotiating with Republicans over overhauling the tax code for U.S. businesses. But with polls suggesting that many in the middle-class are still concerned about their economic security, Obama returned to populist tax ideas that are popular with voters, and that Democrats believe could put them in a good position for the 2016 elections.
Republicans have also hoped to broaden out tax reform discussions to include individuals. But as Hatch’s comments showed, the two parties have more differences when it comes to individual tax changes, and widening the discussion could cause even more difficulties for what lobbyists and lawmakers believe will already be an uphill climb for tax reform.
While some top Republicans have also expressed concern about income inequality, GOP officials have sought a more comprehensive approach more to help businesses that pay through the individual system.
Hatch called tax reform his top priority as Finance chairman, but said he didn’t believe the president was on board with key principles needed for an overhaul – including making the tax code simpler and ensuring that a rewrite didn’t raise more revenue for the government.
“This plan that we’ll hear about tonight appears to be more about redistribution, with added complexity, and class warfare, directed at job-creating small businesses, than about tax reform, which is unfortunate, because we’re going to need real leadership from the White House —not just liberal talking points — if tax reform is going to be successful,” Hatch said.
Hatch made his comments at a speech laying out his priorities for heading up the powerful Finance Committee, whose jurisdiction touches much of the U.S. economy.
During the speech, Hatch urged Obama to work more aggressively to clinch trade deals that make many Democrats queasy, and insisted Republicans would seek to whittle away at the president’s healthcare law. He also acknowledged full repeal was a long shot.
The Utah Republican also said that it was unlikely that Congress would raise the gas tax, after sounding more open to the idea earlier this month. Plus, he sounded cool to the idea of using the process known as budget reconciliation to seek to enact broad policy changes. Other Republicans have floated both tax reform and healthcare changes as a reconciliation options.
“When it comes to items that fall under the jurisdiction of the Finance Committee, my preference is to work toward bipartisan solutions,” Hatch said. “However, we should not — and in my opinion cannot — take any tool off the table.”
The White House said over the weekend that the president would seek to raise the capital gains tax back to 28 percent — the same rate as in the Reagan-era overhaul of the tax code, but up from 15 percent when Obama took over. Obama will also call for a tax on some of the nation’s largest banks, and to end a tax break for certain inherited assets.
With that new revenue, the president hopes to expand the child tax credit, the Earned Income Tax Credit and a key incentive for education expenses – some of Democrats’ top priorities in the individual tax system.
As Hatch slammed those proposals, he also noted that the Finance Committee had set up bipartisan working groups to help work toward a potential comprehensive revamp for the tax code.
House tax writers set up a similar exercise in 2013, but then had little success reaching bipartisan accord.
But Hatch stressed Tuesday that “this is not an exercise. This is not theater, nor is it just for show. This is a very real undertaking.”
“I don’t want to just release a framework or a proposal that doesn’t go anywhere. My only goal when it comes to tax reform is to make new law,” he stressed.