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Don’t Guarini Me, Bro!

Why do lobbyists work so hard to counter a tax bill that has no chance of passing?

Mar 17, 2014, Vol. 19, No. 26 • By IKE BRANNON
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In reality the low-hanging fruit dried up even before the financial crisis, when members began paying for one-year extensions of various tax breaks (such as the annual exercise of passing tax “extenders”) with permanent changes in the tax code. And it illustrates the very real danger facing industries and corporations with Camp’s DOA tax reform: A tax increase that would hurt them might have been included in this bill for the purpose of paying for lower rates. Staffers might borrow the idea to pay for some other reform that has less for them to like than the current one—or to pay for something else entirely.

While Camp’s bill may be going nowhere, it’s not because he didn’t do his homework. Camp has devoted his entire chairmanship to accomplishing reform: The committee held dozens of hearings on various topics related to reform, producing several well-received white papers on various intricacies related to the tax code. He and his staff have met with anyone who had an interest in tax reform, and Camp went on a highly publicized trip this summer with Finance Committee chairman Max Baucus across the country, talking to denizens outside the Beltway with an abiding interest in tax reform.

This diligence suggests that at least some of the revenue-raisers included in the bill to help pay for lower marginal rates have already passed muster with at least one group of Republicans—those on Camp’s committee—along with a few Finance Committee Democrats. That a tax on big banks or a reduction in the cap on the mortgage interest deduction from $1 million to $500,000 could potentially get through the Ways and Means Committee opens up a range of possibilities for entrepreneurial members.

With tax reform going nowhere fast, what’s to keep members from borrowing these pay-fors to pay for something else—like infrastructure improvements, a permanent solution to the Medicare “doc fix” that Congress agonizes over every year, or some other tax or spending proposal that somehow unifies the White House, Senate, and House?

A new list of revenue-raisers is officially in play, and tax lobbyists will be staying up late to fight over them while tax reform languishes.

Ike Brannon is a senior fellow at the George W. Bush Institute and president of Capital Policy Analytics, a consulting firm in Washington, D.C. 

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