Congressional Republicans maintain that the prospects for tax reform in the next two or three years are good now that they control the Senate.
Fixing the tax code is crucial to promoting economic growth and job creation, according to Rep. Kevin Brady (R-TX), who spoke at a Tax Executives Institute conference covered by Bloomberg BNA this week.
“There’s no question in my mind that a Republican-held Senate enhances the likelihood of a Senate tax draft in this next session,” Brady said. “They have a lot of work to do to make that happen. At the end of the day, tax reform, if it is signed in the next two to six years, will be bipartisan, but it is very important both chambers advance their vision of tax reform.”
Brady worked on the tax reform discussion draft released earlier this year by House Ways and Means Committee Chairman Dave Camp (R-MI), which would reduce the top corporate tax rate to 25 percent from the current 35 percent, and the top individual tax rates to 35 percent (25 percent for certain income) from the current 39.6 percent. Getting to those lower rates, however, forced Camp to pare back some popular tax deductions and credits valued by various individual and business interests.
ASAE and the association community are opposed to a number of provisions in the Camp draft that would affect the revenue streams of associations, particularly provisions to make royalty income and certain qualified sponsorship payments subject to tax.
With Republicans set to take control of both chambers, leadership will have to decide whether to push for comprehensive tax reform or opt for the lower-hanging fruit which is corporate tax reform. The White House has been receptive to making some adjustments to the tax code for businesses, but won’t support individual reform that doesn’t raise taxes for upper-income earners.
Tax analysts will be watching closely to see whether the Senate Finance Committee, which will be chaired next year by Sen. Orrin Hatch (R-UT), is on the same page on tax reform as the Ways and Means Committee, which will likely be chaired in 2015 by Rep. Paul Ryan (R-WI).