Legislative Activity

Senators Submit Tax Reform Letters to Finance Committee; Promised 50 Year Secrecy on Tax Expenditure Submissions

Senate Finance Committee Chairman Max Baucus (D-MT) and Ranking Member Orrin Hatch (R-UT) asked their Senate colleagues on June 27 to provide proposals in response to a “blank-slate” approach (i.e., assuming elimination of all tax expenditures from the Code) by last Friday, July 26. The Chairman and Ranking Member requested input from members on what expenditures and other provisions should be maintained, repealed, or added to a reformed Code. To encourage submissions, the Senate Finance Committee staff promised that submissions will not be released until December 31, 2064, given concerns that the letters could become public.

One senator, though, Sen. Jeff Flake (R-AZ), has already publicly released his submission, which does not address specific expenditures. Instead, Sen. Flake’s letter makes the case for the elimination of “tax earmarks” and unproductive provisions of the Code, coupled with lower individual and business income tax rates, the construction of a competitive international tax system, simplification of the Code, and elimination of double taxation, including the “death tax.”

A number of other senators have submitted letters to the committee as well, though many will choose to keep their letters private.

Senate Majority Leader Reid: Tax Reform Must Raise at Least $975 Billion

Commenting on the tax reform effort led by Chairman Baucus and House Ways and Means Committee Chairman Dave Camp (R-MI), Senate Majority Leader Harry Reid (D-NV) indicated that any tax rewrite should produce at least $975 billion in revenue, equal to the amount called for in the Senate-passed budget resolution earlier this year. Majority Leader Reid surmised that tax reform “can’t be even close to [revenue] neutral.”

Senate Republican Leadership and Finance Committee Republicans: Tax Reform Must Be Revenue Neutral

A group of 14 Senate Leadership and Finance Committee Republicans submitted a letter asserting that tax reform must be revenue neutral. The letter calls for lower rates and elimination of distortions in the Code to create jobs, boost income, and improve America’s long-term fiscal health.

Ways and Means Democrats Discussing Options with Chairman Camp

Last Tuesday, July 23, the 16 Democrats on the House Ways and Means Committee sent a letter to Chairman Camp requesting a pre-August recess meeting to discuss a bipartisan plan for moving comprehensive tax reform. The letter indicates that the committee’s Democrats are “hopeful that the bipartisan groundwork that has been laid this year can result in bipartisan tax reform legislation from this Committee.” In response to the request, the committee is scheduled to meet this Wednesday, July 31 to discuss the path for developing a bipartisan tax reform measure.

This Week’s Hearings:

  • Wednesday, July 31: The Senate Finance Subcommittee on Energy, Natural Resources, and Infrastructure will hold a hearing titled “Powering Our Future: Principles for Energy Tax Reform.”
  • Thursday, August 1: The House Ways and Means Committee will hold a hearing on the current status of the Obama’s Administration’s efforts to implement the Affordable Care Act.

Regulatory Activity

FATCA Delayed

On July 12, the Internal Revenue Service (IRS) issued Notice 2013-43, extending timelines and other guidance regarding the implementation of the Foreign Account Tax Compliance Act (FATCA). Withholding will begin on July 1, 2014, rather than January 1, 2014, along with other extensions. The delay is an attempt by the IRS to provide financial institutions and foreign governments additional time to set up their information technology structures necessary for the reporting. The extension will also allow the U.S. Treasury additional time to conclude more intergovernmental agreements with other governments.