Senate Finance Committee tax reform working groups begin deliberating

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The tax reform working groups created by Senate Finance Committee Chair Orrin Hatch, R-Utah, have begun working toward legislative recommendations that Hatch wants ready by the end of May.

Hatch established bipartisan tax working groups to examine five areas: individuals, business, savings and investment, international, and infrastructure and community investment. The working groups were instructed to recommend actual legislative proposals if possible, but that may be difficult. Each group is evenly divided between Republicans and Democrats, so achieving a majority would take bipartisan agreement.

No public meetings for any of the groups have been announced, although some groups have invited outside stakeholders to present privately. The full Senate Finance Committee is also continuing to hold public hearings on tax reform. The committee held a hearing on fairness in taxation on March 3 and is planning a hearing on tax simplification on March 10.

Despite Hatch’s earnest efforts, tax reform remains unlikely this year. Huge divisions remain between Republicans and the administration. Republicans favor either comprehensive tax reform that includes individuals or business tax reform that includes pass-throughs, but the administration is pushing for corporate tax reform. The annual report from the president’s Council of Economic Advisers made clear that the administration believes an individual rate cut will help high-income taxpayers more than it will help pass-throughs, and that tax reform should focus on making corporate rates more competitive.

House Ways and Means Committee Chair Paul Ryan, R-Wis., is not pursuing tax reform as aggressively as Hatch. He has been more focused on bills to make recently expired provisions permanent and preparing potential replacements if the Supreme Court ends Section 36B subsidies for health coverage in federal exchanges.

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