Tax writers begin new session focused on international reform
The new congressional session launched last week, and the top tax writers in both chambers are seeking to build on the $680 billion tax package enacted late last year by turning their attention to international reform.
Senate Finance Committee Chair Orrin Hatch, R-Utah, said last year’s massive tax compromise should pave the way for bigger tax changes in 2016 and 2017. The bill included more than 100 tax provisions and made more than 20 of the most popular provisions permanent (see Tax Legislative Update 2015-07 for a full discussion of the bill). The result is a major change in the revenue baseline, meaning future tax reform proposals would need fewer revenue raisers to be considered revenue neutral.
Hatch and House Ways and Means Committee Chair Kevin Brady, R-Texas, agreed that the focus in 2016 should return to tax reform. But major legislative changes are difficult in a presidential election year, and Brady acknowledged that 2016 would be more about “laying the foundation” for tax reform in 2017 and 2018. Lawmakers are particularly focused on international reform.
House Speaker Paul Ryan R-Wis., tried to reach agreement with Democrats on international-only reform to accompany a highway spending bill last year before negotiations faltered and he became House speaker. He has since said the House should lay down a policy marker by advancing international reform this year even if it has no chance of becoming law, although Brady and Hatch have been slightly more optimistic about the chances of actual compromise with Democrats in an election year.
House Republicans will discuss the tax agenda for the new year in their retreat this week, but first, Brady may not be done with last year’s $680 billion tax package. He said Congress may need to revisit the bill with some corrections. The final agreement came together quickly, and the 100-plus tax provisions were rushed to the floor so that Congress could adjourn for the holidays. He specifically acknowledged that some Democrats were disappointed that the deal didn’t extend the investment tax credit under Section 48 for several energy sources besides solar.
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