As both the Senate Finance and House Ways and Means committees announced late last week that they had begun their “high-profile” efforts to reform the tax code—with meetings and hearings scheduled this week—the House and Senate plan to finish work this week on a continuing resolution (CR) to fund the government for the rest of the fiscal year.
Senate Finance Committee Chairman Max Baucus, D-Mont., and Orrin Hatch, R-Utah, ranking member on the committee, plan to release discussion papers to be used during bipartisan meetings on tax reform issues. The first meeting, scheduled for Thursday, will focus on simplifying the tax code for families. Other meetings will cover an array of issues, including examining the tax treatment of small businesses and corporate investment; families and children; education expenditures; different types of income and tax structures; international taxation; and charitable giving and tax-exempt organizations.
The committee said in a statement that the end goal was “a comprehensive tax reform plan—crafted through regular order with input from all members of the committee—that will help businesses create jobs, simplify the system for families and give the nation a long-term economic boost.”
The House Committee on Ways and Means held a hearing Tuesday on how tax reform and tax provisions affect state and local governments.
During his opening remarks at the hearing, Rep. Dave Camp, R-Mich., chairman of the committee, said that “we are not writing a tax reform bill in some ivory tower. Changes to the tax code will have a real impact on state and local economies, and the committee needs to hear directly from these stakeholders before considering any proposals as part of comprehensive tax reform.”
In addition to the Tuesday hearing, Camp said the committee’s 11 separate working groups would “serve as a way to gather information from these stakeholders about how current tax law affects them.” These reports, Camp said, “will be important to have as we begin to explore what changes, if any, should be considered.”
Camp pointed to several items in the tax code that directly affect state and local governments, with the most significant and widely known provisions including:
- The exclusion of state and local governmental income from federal income tax;
- The itemized deduction for state and local income, property and sales taxes;
- Various benefits for state and local bonds; and
- Special rules for state and local government employee pensions and benefits.
No Agreement Yet on CR
As to funding the government, with the March 27 deadline looming, lawmakers are set to finish work this week on a continuing resolution before breaking for a two-week spring recess.
On Monday, Senate Majority Leader Harry Reid, D-Nev., said lawmakers had recessed for the weekend so negotiators could attempt to reach an agreement on a list of amendments to consider Monday. Reid said that the bill managers, Appropriations Committee Chairwoman Barbara Mikulski, D-Md., and ranking member Richard Shelby, R-Ala., had “made good progress over the weekend,” but that they had not yet reached an agreement. “Unfortunately, there has been difficulty getting senators on both sides to agree to a finite list of amendments,” Reid (left) said.
Joe Lieber of Washington Analysis notes in his Washington This Week newsletter that “all indications suggest that Reid spent the weekend working with other members to make whatever passes the upper chamber as palatable as possible for House Republicans, thereby minimizing the amount of bicameral work that needs to be done prior to the recess.”