Neal Needs Steady Hand to Steer New Progressive Tax Writers

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By Kaustuv Basu and Lydia O’Neal

Ways and Means Chairman Richard Neal is days into his new role and has a challenge ahead: balancing the ambitions of the committee’s new progressive members with the vision of its more moderate lawmakers.

Of the 10 new members named to the tax-writing panel the week of Jan. 7, five members are part of the Congressional Progressive Caucus, a faction that could potentially pose legislative challenges as Neal, a Democrat from Massachusetts, starts setting the committee’s agenda.

The five lawmakers—Don Beyer (Va.), Dwight Evans (Pa.), Steven Horsford (Nev.), Gwen Moore and Jimmy Panetta (Calif.)—have joined existing members like Ways and Means Reps. Lloyd Doggett (Texas) and Earl Blumenauer (Ore.) in the left-leaning caucus, which has about 100 House members.

The committee’s new progressives could pressure Neal to ask for President Donald Trump’s tax returns, try to raise the corporate tax rate from the current 21 percent, and generally make life uncomfortable for Neal, who is seen as a centrist and pragmatic.

While some progressive policy efforts on the tax front don’t differ from the principles of the committee’s other Democrats, any division or lack of focus could hamper the panels overall ability to introduce viable legislation now that it has the majority in the chamber.

The progressive ideas “will also need to be balanced, particularly by Chairman Neal, with the need for Democrats to demonstrate that they can govern, including where appropriate to compromise in order to get legislation enacted,” said Marc Gerson, a former top Ways and Means Republican staffer, now with Miller & Chevalier.

Power in Numbers

Neal brushed aside a question about any divisiveness with the Ways and Means progressives, saying that “I don’t know they would have much to quarrel with me about.”

Still, Neal will have to be responsive to the progressives because they make up as much as 40 percent of the Democratic caucus, said Janice Mays, a former top Ways and Means democratic staffer, now a managing director at PwC. “Whether they are on the committee or not, they would be influencers.”

The challenge for Neal will be to have his committee members “keep their powder dry” and stop them from taking stances on issues until they have fully learned about them, Mays said. Neal would prefer to have a unified position in the beginning rather than an open fight on the House floor, she said. But some of that is outside Neal’s control, with new left-leaning Democratic members such as Rep. Alexandria Ocasio-Cortez already weighing in on tax policy. She suggested this month that income above $10 million be taxed at a 70 percent rate.

Priority Areas

Big picture ideas such as funding infrastructure, fixing Social Security or paying for healthcare shouldn’t divide the progressives and moderates, Beyer told Bloomberg Tax.

Beyer, a businessman who owns car dealerships, is also part of the New Democrat Coalition, a centrist group—indicating that crossover is common between the different Democratic groups.

No freshmen were added to the committee, a sign that all members are comfortable with the legislative process.

Progressives could latch on to issues such as the 2017 tax law’s effects on women and minority-owned businesses, said Caroline Bruckner, managing director of American University’s Kogod Tax Policy Center. She is a former Democratic chief counsel on the Senate Committee on Small Business and Entrepreneurship, and has researched the issue.

Another obvious area of common ground between progressives and moderates could be a deal to finance infrastructure with tax reform, Bruckner said.

Potential Roadblock

Too much progressive noise could be counter-productive, with Republicans waiting in the wings to mount aggressive rebuttals.

Former Ways and Means Chairman Kevin Brady (R-Texas) had a word of warning for those who might want to tinker with the 2017 tax law, which he said has changed the trajectory of the U.S. economy.

It would be a mistake to make “any changes that slow that growth, slow those paychecks, slow those opportunities and competitiveness,” Brady said.

One Family?

Jim Manley, a former top adviser to Senate Majority Leader Harry Reid (D-Nev.), said he saw no “bomb-throwers” among the progressives named to Ways and Means.

The tenor of the debate may shift to the left in the committee but the reality is that Democrats will have to come together to pass legislation, he said.

The new additions don’t necessarily mean that the Democratic tax policy pendulum will swing very far to the left, Jennifer LaTourette, vice president of the lobbying firm Van Scoyoc Associates, told Bloomberg Tax.

“I think the noise will shift to the left,” but what plays out on the news networks and social media won’t necessarily play out in policy, she said. “There’s a difference between who has the loudest voice and who has the greatest number of voices.”

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