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Nov. 9 — Sen. Orrin G. Hatch (R-Utah), as chairman of the Senate Finance Committee, is expected to push for a tax overhaul in the 115th Congress after the Republicans held on to their majority in the Senate.
The Republican victory in the 2016 elections means Hatch will continue to pursue some kind of tax code makeover that would lower the corporate tax rate, move to a more territorial tax system and provide revenue for infrastructure through repatriation, lobbyists and staffers said. Hatch will likely pursue a “corporate integration” proposal that he talked up throughout 2016, which would eliminate the double layer of corporate taxation.
The Finance Committee will renew efforts to revamp the tax code, Hatch said in a statement after election results were announced. Other possible areas of interest for the committee include the European Commission’s state aid investigations, the finalized debt-equity regulations under tax code Section 385 and oversight of the Internal Revenue Service.
A Republican administration and a House controlled by the same party open up the possibility that lawmakers could use reconciliation—a fast-track budget measure—to pass tax overhaul legislation or repeal the Affordable Care Act in the Senate, a former Republican tax counsel said. For Senate passage, reconciliation measures need only a 51-vote majority instead of 60 votes.
President-elect Donald Trump’s tax plans include cutting the corporate tax rate to 15 percent from 35 percent and repatriation of corporate profits held overseas at a one-time tax rate of 10 percent. Trump’s tax plans have been somewhat uncertain but some of the provisions mirror a House Republican tax overhaul plan unveiled earlier this year.
The idea of a deal to fund roads, bridges and other infrastructure financed by a tax on repatriated corporate earnings has been bubbling for a while. Almost all the major players on the committee, including Charles E. Schumer (D-N.Y.), who is expected to become Senate minority leader when Congress reconvenes in January , have voiced support for the idea, possibly coupled with some kind of piecemeal tax overhaul.
Lobbyists said they expected the idea to gain traction under a Republican administration.
What happens in the Finance Committee will depend a lot on what the troika of Hatch, Schumer and Sen. Ron Wyden (D-Ore.), who is expected to remain ranking member, can agree on.
All three are consummate dealmakers, lobbyists said.
“Hatch is naturally bipartisan. Wyden has expressed a lot of interest in reform. Schumer will be want to be part of any deal,” said Dean Zerbe, a former Finance Committee tax counsel and national managing director of Alliantgroup LP.
“I think the general theme for the Republicans will be lowering the rate across the board. And probably offsetting some of it with limitation on deductions and credits at the individual level while looking at small business and passthroughs,” Zerbe said.
Chances of bipartisan engagement in the Senate are much higher than the House, several lobbyists said. That’s because several Democratic senators are up for re-election in 2018, and they may be willing to work with a Republican Senate.
But only time will tell whether Trump and congressional Republicans play nice and what part Senate Democrats will play. “Republicans might be able to pass tax legislation without reconciliation if they can get the votes of Senate Democrats up in 2018 in red or swing states,” one lobbyist said.Significant hurdles stand in the way of a corporate tax overhaul, including the treatment of passthrough businesses. And the activist left wing of the Democratic Party in the Senate led by Bernie Sanders (I-Vt.) and Elizabeth Warren (D-Mass.) could try to pull Schumer away from any centrist compromises.
Hatch promoted the idea of corporate integration through most of this year. His plan includes a deduction for dividends that corporations pay and would treat these dividends the same as interest payments.
But a draft bill that his tax counsels have been working on wasn’t released before the elections because the drafters were waiting for final scores from the Joint Committee on Taxation.
Several lobbyists said they expect Hatch to ramp up efforts in this area soon. The corporate integration idea could become a part of a bigger tax overhaul effort, they said.
The Finance Committee will also have to address tax extenders legislation next year if Congress doesn’t tackle the idea during the lame-duck session.
The Finance Committee currently has 14 Republicans and 12 Democrats. It remains to be seen if that ratio changes in the next Congress.
Sens. Richard M. Burr (R-N.C.) and Patrick J. Toomey (R-Pa.), two committee members in toss-up races, held on to their seats.
But a replacement member will have to be named for Sen. Dan Coats (R-Ind.), who is retiring.
Committee members are expected almost immediately to take on proposals to expand access to home dialysis therapy and broaden a Medicare Advantage model that tests new benefit designs, congressional staff told Bloomberg BNA.The Finance Committee Chronic Care Working Group, headed by Hatch and Wyden, has been working for more than a year on ideas to improve care for Medicare beneficiaries with chronic conditions that will save the federal government money.The committee could introduce a bill as soon as Congress reconvenes soon for a lame-duck session. The bill would extend the Independence at Home Model of Care that uses physicians and nurse practitioners for home-based primary care and expand home dialysis by increasing the sites from which beneficiaries can get an assessment of their condition by telehealth.The chronic care proposal was widely praised by trade groups such as the American Medical Group Association and the American Medical Association, and by political observers such as the Bipartisan Policy Center.There is wide support for the committee’s proposal to unify the Medicare and Medicaid grievance and appeals processes, the Bipartisan Policy Center’s health team said in a statement. The center’s health team includes Bill Hoagland, formerly vice president of public policy for CIGNA, and Katherine Hayes, who was an associate professor of research at the George Washington University School of Public Health.The Finance Committee is also expected to consider taking up either mental health legislation passed by the House earlier in 2016 (H.R. 2646) or a bill aimed at comprehensive mental health reform (S. 2680) approved by the Senate Health, Education, Labor and Pensions Committee.
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