Wednesday, February 20, 2013

US tax reform: 11 working groups to watch, but don't get your hopes up

US tax reform is so big and so bad it needs 11 working groups to handle it all!  From the Camp/Levin press release:
Each of the 11 groups will review current law in its designated issue area and then identify, research and compile feedback related to the topic of the working group.  The working groups will be responsible for compiling feedback on its designated topic from: (1) stakeholders, (2) academics and think tanks, (3) practitioners, (4) the general public and (5) colleagues in the House of Representatives.  Once the work of those groups has been completed, the Joint Committee on Taxation will prepare a report for the full Committee, due by April 15, 2013, that describes current law in each issue area and summarizes the other information gathered by the Committee Members.
And the 11 working groups and their chairs (R) and vice-chairs (D) are:

  • Charitable/Exempt Organizations--David Reichert (R-WA), John Lewis (D-GA)
  • Debt, Equity and Capital--Kenny Marchant (R-TX), Jim McDermott (D-WA)
  • Education and Family Benefits--Diane Black (R-TN), Danny Davis (D-IL)
  • Energy--Kevin Brady (R-TX), Mike Thompson (D-CA)
  • Financial Services--Adrian Smith (R-NE), John Larson (D-CT)
  • Income and Tax Distribution--Lynn Jenkins (R-KS), Joseph Crowley (D-NY)
  • International--Devin Nunes (R-CA), Earl Blumenauer (D-OR)
  • Manufacturing--Jim Gerlach (R-PA), Linda Sanchez (D-CA)
  • Pensions/Retirement--Pat Tiberi (R-OH), Ron Kind (D-WI)
  • Real Estate--Sam Johnson (R-TX), Bill Pascrell, Jr. (D-NJ)
  • Small Business/Pass Throughs--Vern Buchanan (R-FL), Allyson Schwartz (D-PA)

I will try to keep tabs on International, but Financial Services will inevitably veer toward international as will many of the other groups. Income and Tax Distribution really ought to be international in scope too but probably won't be. I don't know either Devin Nunes or Earl Blumenauer but a quick look at both gives no reason to be optimistic that anything like comprehensive reform will come out of this working group. Let's take a quick look:

Devin Nunes is a Tea Party darling, new to Ways & Means, looks like an energy and national security guy all the way, but background and education in agriculture. As to tax, pretty quiet until he signed on as co-sponsor to Paul Ryan's H.R. 4529, "A Roadmap for America's Future", which is all about cutting medicare and social security, and now he's promoting his "American Business Competitiveness (ABC) Act", which apparently would abolish corporate tax all together and maybe advocate for a consumption tax instead.  I think we can see which way he's going to go in this working group. Let's look for him to use the words "competition" and "freedom" and maybe "fair" or "level playing field" a lot and therefore to push for less taxation on multinationals in general (if he can't get rid of it all together) and to be against anything like unitary taxation (formulary apportionment) or corporate tax transparency, the two pillars that would be central to any comprehensive tax reform in the US or really anywhere.  On the other hand, he does seem to favor transparency sometimes [don't miss the impressive list of supporters].  So surprise me, Devin! I do love surprises.

How about his vice chair? Earl Blumenauer has been in Congress since 1996, has a law degree (Lewis & Clark 1976), and is certainly from Portland: he's into mass transit, bicycle commuting, various conservation/environmental causes, PBS, and weed. But he's also a free trade guy, supportive of all the FTAs you can throw at him, that's earned him some protests from the left. He seems pretty quiet on tax, though in 2012 he started getting vocal about big oil subsidies, the AMT and the Bush tax cuts. It looks to me like the tax issues on his radar are domestic ones, mostly involving saving entitlement programs and increasing progressivity--both are safe, vague ground for democrats. I expect he'll use the word 'fair' a lot, but it won't mean what Nunes means when he says it, and Blumenauer will focus on the distributional impact of any proposed reforms, looking for signs it violates progressivity. But I don't expect him to offer all that much, overall. International tax doesn't seem to be anywhere at all on his list of priorities.

So the working group charged with major overhaul of international tax law in the US will be chaired by one anti-tax tea party young gun, and one seasoned and mild-mannered Portlandia character with his mind on other things.

Should be fun to watch this.

1 comment:

  1. It is interesting that they are publically posting all of the received comments.

    Just about all of the "International" comments received to date are anti FATCA/FBAR and all from regular joes. No bankers yet. In fact it looks like almost a quarter of ALL received comments to date are international related and anti FATCA/FBAR. It will be interesting as we get closer to the April 15th deadline to see whether the banks chime in and if any tax profs chime in IN Favor of citizenship based taxation and FATCA. Of course it is not unexpected that the tax practioners and banks might hold out to the last minute.