Lawmakers Must ‘Adjust Expectations’ About Tax Reform: Hatch

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By Laura Davison

Tax writers need to be flexible about their policy priorities in order to overhaul the tax system, Senate Finance Committee Chairman Orrin G. Hatch (R-Utah) said.

“My hope is that people may be willing to adjust their expectations and bend their preferences in order to make our larger shared goals a success,” Hatch said June 7 at a Bloomberg BNA event.

Hatch’s comments come a day after a series of meetings between House and Senate Republicans and President Donald Trump and his advisers. So far, House Republicans have not indicated they are willing to back down from a key feature of their tax reform plan—a border adjustment tax. Senate Republicans and Trump’s advisers have expressed concerns about it.

Hatch’s statements speak to growing concern in tax circles that lawmakers in the House and Senate won’t be able to come to a consensus on the details of tax reform before the window of opportunity closes before the 2018 midterm elections. Revenue-neutral legislation that cuts business tax rates significantly—a stated goal of many Republicans—will require lawmakers to make difficult calls about what tax breaks to eliminate.

“Until we perform the surgery and start eliminating preferences and credits in order to bring down rates, and get an official readback from the Joint Committee on Taxation, we cannot speak definitively on the rate targets,” Hatch said.

Painful Cuts

House Ways and Means Committee ranking member Richard E. Neal (D-Mass.) pointed out that when former Ways and Means Chairman Dave Camp (R-Mich.) drafted his tax reform plan in 2014, lowering the corporate tax rate 10 percentage points required losing tax breaks that companies valued more than the lower rate.

“When they found out what the 25 percent rate meant in terms of giving up preferences, deductions, and exclusions, they weren’t so much in favor anymore of a 25 percent rate,” Neal said at the event.

He predicted that the House GOP plan, including the $1 trillion border adjustment tax revenue raiser, could have trouble getting out of the Ways and Means Committee.

Hatch urged his colleagues to consider policies that won’t cause too much division in the Republican caucus, because Senate Republicans will need nearly all their 52 members to pass the bill using budget reconciliation.

“We have to see where the numbers are going before we object to the removal of certain tax provisions,” he said. “Our margin of error with regard to the vote total is very slim.”

To contact the reporter on this story: Laura Davison in Washington at

To contact the editor responsible for this story: Meg Shreve at

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