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Tags: playing | down | tax | reform

Wide Gulf on Tax Reform Makes Prospects Bleak in 2015

By    |   Friday, 26 December 2014 03:57 PM

For the first time since 2007, Republicans will control both the House and Senate when the 114th Congress begins next month. Still, with President Barack Obama in the White House and 46 Democrats in the Senate – enough to sustain a filibuster – many in the GOP are playing down the possibility of comprehensive tax reform being enacted in the coming year, the Washington Examiner reported Friday.

Instead, the GOP is narrowing its focus to changing the corporate part of the tax code.

"I don't think you can get the individual side of the tax code done next year," said Douglas Holtz-Eakin, former head of the Congressional Budget Office and top economic adviser to Sen. John McCain's 2008 presidential campaign.

The one area where agreement may be possible is corporate tax reform, said Holtz-Eakin, president of the American Action Forum, a pro-free-market think tank.

In 2012, Obama proposed lowering the corporate tax rate to 28 percent while eliminating what he regards as corporate loopholes and adding some new taxes.

Two years later, however, the president proposed spending the revenue that would be raised by closing tax loopholes on repairing the nation's crumbling infrastructure, such as roads and bridges.

Republicans, by contrast, want to use that money to lower corporate tax rates.

"That's just a big, big difference," one GOP aide told the Examiner.

Congressional Democrats and Republicans spent much of 2014 debating the possibility of reaching a bipartisan agreement to extend scores of tax breaks for individuals and businesses.

But even though lawmakers from both parties generally agreed on many of the changes, the two sides were unable to agree on a package lasting beyond this year because of objections from the Obama White House, which regarded a bipartisan proposal being negotiated as favoring corporations over lower-income workers.

In the end, Congress gave up and passed just a retroactive extension of the tax breaks covering only 2014 tax filers.

While many Republicans are skeptical that Obama is prepared to work with them to reach an agreement, the incoming GOP chairmen of congressional tax-writing committees are determined to try.

But the pair – Sen. Orrin Hatch of Utah, who will chair the Senate Finance Committee, and Wisconsin Rep. Paul Ryan, incoming chairman of the House Ways and Means Committee – may have to settle for much less than a wholesale reform of the tax code.

Most lawmakers think Congress may just try for limited corporate tax reform, such as changes benefiting small-business owners who file their taxes as individuals.

Like Ryan, Hatch wants to end taxation of foreign corporate earnings. He contends that this policy, which is unique to the United States, has prompted large U.S. companies to leave the country.

Critics of the current tax code point to the example of Burger King's decision to merge with Tim Horton's restaurant chain and move its headquarters to Canada. With Canada having an effective corporate tax rate that is about half that of the United States, moving abroad may prove necessary to enable some firms to remain competitive, they argue.

Reforming the U.S. tax code would result in "more worldwide American companies establishing or retaining their corporate headquarters in the United States, more exports to global markets, and retention and reinvestment of money in the United States rather than abroad," Hatch said.

But in an illustration of the wide gap separating Democrats and Republicans on taxes, Obama and congressional Democrats have attacked companies that leave the United States to escape higher taxes as "unpatriotic" and have pushed to curtail such actions.

© 2021 Newsmax. All rights reserved.


US
For the first time since 2007, Republicans will control both the House and Senate when the 114th Congress begins next month. Still, with President Barack Obama in the White House and 46 Democrats in the Senate, many in the GOP are playing down the possibility of comprehensive tax reform . . .
playing, down, tax, reform
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2014-57-26
Friday, 26 December 2014 03:57 PM
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