GOP staffers: Tax reform teed up for September
Republican staffers tell The Daily Caller that new tax cuts and regulatory reforms aimed at jumpstarting the economy will be on the agenda in the House of Representatives when it returns from recess after Labor Day.
Staffers say no specifics have been locked in yet. But a significant tax reform package could come this fall, they say, because nothing is likely to be accomplished after the 2012 election cycle begins in earnest.
“Republicans need to lay out a tax proposal sooner rather than later instead of just focusing on spending,” said Texas GOP Rep. Kevin Brady, the vice-chairman of the congressional Joint Economic Committee. “A strong economy is key to reducing our deficits.”
The conservative House Republican Study Committee is also reportedly planning to supplement the Cut, Cap, and Balance plan with a “growth” element including tax cuts and regulatory reforms.
Hill staffers tell TheDC that details will become clearer in September. But Ohio Rep. James Jordan, the RSC chairman, sent a letter to his members on Aug. 24 asking for input on “adding robust growth components, like tax reform and regulatory reform” to Cut, Cap and Balance.
According to Rep. Brady, the RSC’s eventual proposal will be a force to be reckoned with in the House Republican Conference because the two groups’ memberships overlap significantly.
Tax cuts were a key part of the budget plan, proposed by Wisconsin GOP Rep. Paul Ryan, which passed last spring. That plan sought to reduce corporate tax rates from 35 percent to 25 percent and similarly lower the top personal income tax bracket from 35 percent to 25 percent.
The Ryan budget also proposed closing corporate tax loopholes that allow some companies to avoid paying any taxes at all, and eliminating $800 billion in new taxes included in President Obama’s health care overhaul.
A committee spokesperson told TheDC that Michigan Republican Rep. David Camp, who chairs the powerful House Ways and Means Committee, intends to make tax reform a priority after Congress reconvenes and push for the same tax rates contained in the Ryan budget.
Rep. Brady told TheDC that the tax rates contained in the Ryan and Camp plans will enjoy strong support from most House Republicans.
“Both regulatory reform and broad tax reform — to simplify the system and lower rates — are priorities for the speaker,” Brendan Buck, spokesman for Speaker of the House John Boehner, wrote in an e-mail to TheDC. “Both are part of our ‘Plan for America’s Job Creators.’”
But Rep. Brady cautioned that many members of Congress will want to influence how changes to the tax code are made, so it remains to be seen what form a final bill will take.
He predicts that passing tax reform into law will be difficult as long as President Obama occupies the White House and Democrats control the Senate.
Former Congressional Budget Office director Douglas Holtz-Eakin urged Republicans to provide a clear alternative economic vision to the one Obama and the Democrats advocate. He called on them to hold the line on developing a tax reform package.
Holtz-Eakin said a proposed Republican tax-reform strategy could be a “spectacular” messaging tool for GOP congressional candidates entering the 2012 election cycle.
“Good policy makes for good politics,” Holtz-Eakin told TheDC. “All policy needs to focus on growth, considering the abysmal track record of this administration, which has placed social programs before growth.
“They have placed health care over growth,” he continued. “They have placed redistribution of wealth over growth … What the administration and the Democrats don’t understand is that growth isn’t a bill. It’s a philosophy.”
The former CBO chief urged Republicans to make any changes to the tax code permanent. He also wants corporate tax rates reduced as a way of encouraging businesses to keep their assets in the United States instead of taking them abroad.
“The Democrats say ‘Look to the 1990s,’ and say that [President Bill] Clinton raised taxes and we had great growth,” Holtz-Eakin said. “But we had the ‘peace dividend’ that led to reduced government spending and the dot-com bubble that led us into a recession. Do they want a repeat of that?”
Holtz-Eakin claims the Obama administration’s effort to spend the nation out of the recession has been as effective as similar efforts by the Nixon, Ford and Carter administrations were in the 1970s when the U.S. lingered through a decade of stagnant economic growth.
Former Virginia Gov. Jim Gilmore, currently president of the Free Congress Foundation, welcomed the idea of a new tax proposal, and called on Republicans to embrace a strong “pro-growth” policy. His organization has been advocating a similar strategy for more than a year under the slogan “Freeze, Grow, Fix.”
“It all links together, because we think you need to freeze spending and not just reduce spending,” Gilmore told TheDC. “We have to reduce spending, and get the growth part, to get the economy moving in an organic way that will raise more revenue — and it’s not just revenue for the government.
“It’s revenue for people’s pockets that will get the economy moving again,” Gilmore insisted, “because people will have some confidence that there will be some growth in the future. Everybody knows that you will never get enough money out of the rich, so … if you raise taxes you are going to be increasing the withdrawal of money out of the private sector.”
Gilmore charged that the Obama administration’s effort to promote economic growth through government spending was doomed to failure because it offers only a temporary fix instead of a long-term mechanism to spur economic growth.
Other groups on the political right agree. “There needs to be a focus on those parts of the tax code that will do most to promote economic growth,” said Ryan Ellis, director of tax policy with Americans for Tax Reform. “People need to be able to make, with some confidence, investment decisions going out over some years. A 10-year temporary tax reform probably won’t do the trick.
“You need to have a permanent change of law.”