Senate Finance Committee Chairman Max Baucus said he intends to release his first draft for a comprehensive tax-code revision within the next two weeks.
The Montana Democrat declined to say which parts of the tax code he will focus on. He said in an interview with Bloomberg BNA that he will consult with other finance panel members before releasing details.
“It will be in legislative language,” Baucus later told reporters, an indication that the document will be formatted like a bill, even though the senator said it won’t be an actual piece of legislation.
Tax lobbyists in touch with congressional staff members have said they expect the committee to begin with tax administration, international tax rules and possibly education-related tax policy.
Baucus and Representative Dave Camp, a Michigan Republican who heads the House Ways and Means Committee, for months have been working together to promote the first sweeping revamp of the tax code since 1986. They started a joint Twitter handle -- @simplertaxes -- and this past summer traveled together on a national “tax reform tour.”
In an interview last month on Bloomberg Television’s “Political Capital with Al Hunt,” Baucus gauged prospects for significant code changes as “quite good,” and said: “Frankly, the failure to do reform is hurting the economy.”
The Finance Committee is scheduled to meet behind closed doors to discuss the drafts as the Senate returns to business this week.
The discussion drafts will be the first tax overhaul documents produced by the committee since a series of 10 option papers that outlined dozens of tax policy areas that could be changed. Those papers, prepared by the Democratic and Republican staffs from March to June, made no recommendations and laid out competing ideas proposed in various bills and by deficit reduction panels.
By framing the discussion drafts in legislative language, Baucus is following an approach taken by Camp. Although he has yet to introduce a bill, Camp has released drafts in legislative language dealing with international taxes, financial products and small businesses.
International tax rules, which help determine the extent to which U.S. corporations with foreign operations direct profits back to the U.S. for reinvestment and hiring, are a promising area for bipartisan agreement, Senator Ron Wyden, an Oregon Democrat, told reporters last week. Wyden, a finance committee member, said that’s the policy area he wants to focus on initially.
Baucus, in his Bloomberg Television interview, said his plan would provide a “permanent solution” to U.S. international tax rules that encourage companies to leave profits outside the country.
Partisan differences surfaced after Baucus announced Oct. 31 that he would release discussion drafts on a code revision within as little as two weeks at that point. The committee’s ranking Republican member, Senator Orrin Hatch of Utah, called that goal optimistic, and said “wide gaps” remained on tax policy.
The biggest difference between the parties’ approaches remains over raising additional revenue and how to use it -- for deficit reduction, government programs or solely for reducing tax rates. Republican lawmakers have said they are firmly opposed to raising tax rates, but some have said they are open to new revenues generated by other means.
Camp has proposed lowering the top corporate rate to 25 percent from 35 percent, and reducing the top individual rate to 25 percent from 39.6 percent. He wants do that without shifting the tax burden across income groups and without losing or gaining federal revenue.
Baucus has said he’d like to get the top corporate tax rate into the “high 20s.” President Barack Obama has called for a 28 percent rate for most companies and 25 percent for manufacturers.
Wyden and three other Democrats on the finance committee -- Debbie Stabenow of Michigan, Sherrod Brown of Ohio and Bob Casey of Pennsylvania -- last week urged that any revision proposal take into account the effect on manufacturers.
The four lawmakers wrote to the congressional Joint Committee on Taxation to ask that it get ready to conduct such an analysis.
“We believe that domestic investment is critical to creating good jobs in the United States and enabling broad-based economic growth, and we will want to gauge the impact of any tax reform proposal on capital-intensive sectors such as manufacturing and other key sectors of the economy,” the senators said.