The House passed Republican-sponsored legislation Thursday to streamline congressional procedures and pass comprehensive tax reform next year.
The bill, known as the Pathway to Job Creation through a Simpler, Fairer Tax Code Act of 2012, includes expedited procedures to allow lawmakers in both the House and Senate to overcome multiple technical hurdles that often cause bills to languish during the legislative process (see House GOP Introduces Bill to Expedite Tax Reform Procedures and House Republicans Make Plans for Tax Reform in 2013). The fast-track bill was largely supported by Republicans, who hope to push through tax rate reductions after the fall elections. House Democrats had objected to the bill, claiming Republicans wanted to “railroad” through their version of tax reform, which includes lowering the top tax rate to 25 percent. The bill passed on a 232 to 189 vote, with every Democrat voting against it along with three Republicans.
House Ways and Means Committee chairman Dave Camp, R-Mich., hailed passage of the bill. He compared it to the passage Wednesday in the House of the Republican version of the Bush tax cuts legislation, extending the current tax rates for all income levels (see House Votes to Extend Bush Tax Cuts). The Democrats’ version, extending the tax cuts only for adjusted gross income under $250,000 a year, was defeated Wednesday.
“Yesterday, the House voted to stop the tax hike,” said Camp in a stztement Thursday. “Today, we voted to force Congress to act on tax reform next year so we can create up to 1 million new jobs by making the tax code simpler and fairer. The process we laid out ensures public debate where all sides can offer amendments. This is the exact opposite of the choice offered by Democrats who continue to call for tax hikes that, according to an Ernst & Young study, will destroy more than 700,000 jobs. I urge the Senate to quickly take up this legislation, protect jobs and join us in making the tax code simpler and fairer for all Americans.”
Democrats have disputed the Ernst & Young study, noting that it was sponsored by conservative business groups like the U.S. Chamber of Commerce and the National Federation of Independent Business.
“We need tax reform, indeed we do, but not a tax rewrite that discourages companies from making it in America and that move us to a territorial system that taxes no businesses’ offshore income, thereby helping to ship jobs overseas,” said Rep. Sander Levin, D-Mich., the ranking Democrat on the Ways and Means Committee. “Surely a plan this radical should be subject to the full scrutiny of regular order and full debate? But not under this bill. Under this bill, the pathway Republicans are setting up is really a railroad to shift the tax burden onto the middle class and shipping jobs overseas. It creates a tax czar who both creates the plan, then certifies that it achieves his goals. It allows him or her to add any other proposal to this high-speed train through Congress: Social Security privatization, repeal of health reform, anything.”
Levin urged passage of an amendment setting out Democratic principles for tax reform, including provisions limiting the use of offshore tax havens, but it was rejected by a 176 to 246 vote.
House Republicans countered that the fast-track legislation only says the introduced version of the bill must meet the specific conditions, but is open to amendment after that, and there is nothing that precludes a compromise. Under the plan, by the end of April, the Ways and Means Committee chairman would introduce a comprehensive tax reform proposal. Provisions would include Republican priorities that the House passed in the previous two budgets: consolidation of the current tax brackets into only two tax brackets, with a top rate of 25 percent for individuals; reduction of the corporate tax rate to a maximum of 25 percent; repeal of the alternative minimum tax, broadening of the tax base to maintain revenue between 18 and 19 percent of gross domestic product; and a territorial system of taxation as opposed to a worldwide system.
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