Congressional approval of a $680 billion tax bill last week may have “set the stage” for tax reform in 2017, The Hill reports.
The bill locked in a number of costly tax breaks that could be traded as part of future legislation that lowers the 35% corporate tax rate, which is widely cited as one of the highest in the world. Allowing the breaks to no longer expire makes it easier to lower the rate while not adding to the budget deficit, The Hill said.
“The big benefit for tax reform is that by extending these tax provisions permanently, you change the baseline. In other words, you assume there would be relatively less revenue coming in to the [Congressional Budget Office] baseline,” said Sen. Rob Portman (R-Ohio), a member of the Finance Committee.
“This is the big boost for tax reform going forward,” he added. “Specifically, I think it makes about a 3-point difference on the business rate, if you want to lower the business rate.”
Reducing the corporate tax rate has long been a goal for Republicans, who argue that it makes the U.S. less competitive on the global stage.
“This will set the stage. We’re going to have a lower baseline. We’ll have a better chance to do comprehensive tax reform,” Senate Finance Committee Chairman Orrin Hatch (R-Utah) said.
Hatch is among the senators who will be central to tax reform negotiations in the next Congress. “First of all, we’ve got to take a look at the code itself. You’re talking about 70,000 pages and we got to skinny that down to where people can understand it,” he told The Hill.
Another key lawmaker, Sen. Charles Schumer (D-N.Y.), has discussed with House Speaker Paul Ryan the possibility of pushing legislation next year that would reform the tax code for overseas corporate income. “We’re going to try to do something in 2016 on international tax reform,” he said.
Schumer said he wants to tax the money that corporations are holding overseas and use that money for infrastructure.