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Reid Dismisses Baucus’ Tax Overhaul Efforts (Updated)

(Tom Williams/CQ Roll Call File Photo)
(Tom Williams/CQ Roll Call File Photo)

Updated 4:50 p.m. | The bipartisan effort to overhaul the nation’s tax code isn’t getting the warmest response from the Senate Democratic leadership.

Senate Majority Leader Harry Reid said that he had no intention of even reading a request from Finance Chairman Max Baucus, D-Mont., and ranking member Orrin G. Hatch, R-Utah, seeking priorities for the tax overhaul.

“I’m not going to be involved in this. I’m not on the committee, I’m not going to do it. I’m not even going to consider it. I frankly haven’t read the letter, don’t intend to,” the Nevada Democrat said.

One Senate Republican aide charged Reid with “sabotage.”

“That the Senate Majority Leader said he has no plans to even read the letter Chairman Baucus and Ranking Member Hatch sent to the whole Senate for tax reform is stunning. First he says he’s behind the Chairman’s effort and then he comes out in what can only be seen as an act of sabotage?” the aide said.

Baucus and Hatch are taking what they call a “blank-slate” approach to exploring the problems with the tax code, which hasn’t seen comprehensive changes since 1986. As part of that, they sent a letter to colleagues in late June, requesting tax expenditures and other provisions that should be included in a new tax law.

“Today, we write to ask you to formally submit legislative language or detailed proposals for what tax expenditures meet these tests and should be included in a reformed tax code, as well as other provisions that should be added, repealed or reformed as part of tax reform,” Baucus and Hatch wrote. “In order to give your proposals full consideration as we work to craft a bill, we request these submissions by July 26, 2013.”

Reid and No. 3 Democratic leader Charles E. Schumer of New York said the Senate’s tax overhaul legislation should reflect the revenue-raising targets from the chamber’s fiscal 2014 budget resolution, which Baucus voted against. That blueprint calls for nearly a trillion dollars in new revenues over the 10-year budget window.

“I’d say the overwhelming majority of Democrats, if not all on the Finance Committee, and same in the … Senate, believe that we have to have revenues as part of tax reform,” Schumer said. “In the budget that Sen. [Patty] Murray put together, there were $975 billion in revenues, and that would be a good target to aim for as part of tax reform.”

Schumer is the only one of the top four Senate Democratic leaders serving on the Finance panel.

“I am in favor of tax reform, but I want everyone here to understand this: I agree with the Secretary of Treasury, Jack Lew, that we have to have a revenue target,” Reid said. “I think there should be a target, a significant revenue target, should be placed in … front of all senators prior to the markup.

“I want Sen. Baucus and Hatch to go forward with tax reform, that’s fine,” Reid said. “But, it has to be under the understanding … that this can’t be revenue neutral. It can’t be even close to neutral.”

Following the comments from Reid and Schumer, Senate Republican leaders and GOP members of the Finance Committee teamed up on a letter to Baucus and Hatch.

“Tax reform should not be used as a pretense for increasing the net tax burden on American families and job creators, particularly in the absence of any serious effort to address long-term spending problems,” the letter said. “If done correctly, comprehensive tax reform can ignite the nation’s economic engine and lead to shared prosperity for all.”

“I have always said that I think the Senate bill needs to raise revenue. That has always been clear. As far as a number, that is still being discussed. I continue to meet with my colleagues on both sides of the aisle and we are building up real momentum for tax reform,” Baucus responded to Reid.

Baucus may face resistance from his own panel’s Democrats on another issue: the underlying approach of starting from scratch and building the tax code back up. Sen Jay Rockefeller, D-W.Va., on Thursday said he thinks that’s a sort of stalking horse for eliminating tax credits that benefit the lower income brackets.

“I think the whole idea of wiping the slate clean is a way of making it much harder to get things like Earned Income Tax Credit, child tax credit back in. I mean we struggled mightily to get those things,” Rockefeller said.

“I’ve been around here a long time, and my guess is what they want to do, those two — Baucus and Hatch — they may already have their deal worked out, and we all sort of know that,” said Rockefeller. “So, we don’t want to send in our top priorities.”

While senators are under no obligation to respond to the request, much less provide their response to the public, a Finance Committee aide expected many senators would submit suggestions by the end of the week.

At least one senator, Arizona Republican Jeff Flake, has taken the extra step of circulating a letter to the media.

“Taxpayers are forced to spend too much time and money navigating the tax code. In addition, the code is littered with ‘tax earmarks’ that have accumulated over time and that create unnecessary disparity in tax treatment,” Flake wrote. “It is my hope that your request for input is the first step in a process that will provide badly needed pro-growth reforms and deliver the tax code that taxpayers deserve — one typified by its fairness, simplicity, and competitiveness.”

Flake’s letter focuses on general goals, rather than specific prescriptions for retaining tax expenditures.

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