Senate Democrats lay out bipartisan tax reform principles

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A group of 45 Senate Democrats has sent a letter to President Donald Trump and Republican Senate leaders calling for bipartisan talks on tax reform, but with three preconditions.

“We are writing to express our interest in working with you on bipartisan tax reform,” said Tuesday’s letter, addressed to Trump, along with Senate Majority Leader Mitch McConnell, R-Ken., and Senate Finance Committee chairman Orrin Hatch, R-Utah.

The letter lays out three key principles the Democrats consider “prerequisites to any bipartisan tax effort.”

The Democrats, led by Senate Minority Leader Chuck Schumer, D-N.Y., and Senate Finance Committee ranking member Ron Wyden, D-Ore., said tax reform should not increase the tax burden on the middle class, and any reform effort should not benefit the wealthiest individuals. They cited Treasury Secretary Steven Mnuchin’s statement during his confirmation hearing that there would be “no absolute tax cut for the upper class,” although he has since backed away from that statement.

“Tax reform cannot be a cover story for delivering tax cuts to the wealthiest,” wrote the lawmakers. “We will not support any tax reform plan that includes tax cuts for the top one percent.”

They also insisted that tax reform go through “regular order” in the Senate and not use the budget reconciliation tactic that Senate Republicans resorted to in trying to pass health reform repeal legislation last week with just 51 votes. “Using a fast-track process like reconciliation would undoubtedly result in outsized political influence on the process and significantly hinder lawmakers’ ability to close loopholes and end special interest favoritism that plagues our current tax system,” the lawmakers wrote. “As such, reconciliation is just a tool to jam through partisan short-term tax cuts that would result in economic uncertainty and instability and significantly increase our budget deficit. This stands in stark contrast to regular order, transparent, and fiscally responsible process that allowed the 1986 tax reform to endure. Only regular order allows for a bipartisan effort and successful, lasting reform.”

The third principle cited by Democrats is that tax reform should focus on providing a revenue base that meets the country’s needs. “Deep cuts to our corporate, individual and other tax rates are very costly,” they wrote. “We will not support any effort to pass deficit-financed tax cuts, which would endanger critical programs like Medicare, Medicaid, Social Security and other public investments in the future. We look forward to working together to write tax reform legislation that provides real relief for America’s working families.”

However, Republicans want to pass tax reform by the end of the year. On Monday, White House officials called for an aggressive timetable (see White House maps ‘aggressive’ timeline to pass tax bill). They hope to begin hearings and a markup of tax reform legislation after the Labor Day, with a goal of passing it in the House in October and the Senate the following month. Mnuchin said they plan to “start going through the normal process” at the beginning of September. The general goal will be to lower both corporate and individual rates, get rid of many deductions and streamline the tax code.

The Senate Finance Committee held a hearing Tuesday to discuss tax reform in the context of affordable housing, considering matters such as the Low Income Housing Tax Credit. At the hearing, Wyden commended Hatch for the bipartisan process he has begun. “After a heated few weeks in the Senate, I know both sides crave a return to bipartisanship and regular order, and for this committee that would mean tax reform is likely on the horizon,” he said. “Senate Democrats outlined our principles for a tax overhaul in a letter to the majority this morning. It spells out what our caucus will bring to the debate. And in my view, it’s in the best tradition of this committee to tackle big issues like tax reform on a bipartisan basis, so it’s my hope that we’re able to bring the two sides together on this issue in the months ahead.”

However, Senate Majority Leader Mitch McConnell, R-Ken., rejected the Democrats' insistence that any tax reform plan not add to the budget deficit and suggested Republicans would need to use reconciliation to pass a tax reform bill. “We have been informed by the majority of the Democrats in a letter I just received today that most of the principles that would get the country going again, they’re not interested in addressing,” he said.

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