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The headquarters of the Internal Revenue Service as seen in Washington.

Comprehensive tax reform no longer in the cards, according to Janice Mays

In a recent interview, top Ways and Means Staffer Janice Mays says political parties are too divided to further a comprehensive tax reform, though smaller tax reforms may be in our future.

Last week, Politico’s Brian Faler did a great interview  (paywall) with Janice Mays, the long-time Democratic staff director for the House Ways & Means Committee. Janice, who has just retired after a remarkable 40 years on the panel’s staff, is one of the wisest—and nicest—people you’ll ever meet on Capitol Hill. Few understand the place as well as she does, so pay attention to her answers about tax reform, which I’ve slightly abridged:

Q. Do lawmakers seem ready to tackle a tax code rewrite next year?

A. No. I think this election…has caused me to think we’ve taken a step back…. And Congress (has) moved from tax reform for everybody to tax reform for business, and now it’s talking about tax reform for international business. So it’s gone to a much smaller place…. With this popular bent in this election, how does the next president…pivot and …focus on helping companies save taxes on their international income when individuals’ focuses are more toward themselves? ... I find it hard to think a new president… can jump into that right now…and I don’t see you succeeding on this without presidential involvement.

Q. But you don’t see comprehensive tax reform in the cards either?

A. I don’t. ... Because you don’t have a unified sense even within one party of what that tax reform should mean. You have the words tax reform, you have the desire to do something that is big and useful. But you don’t have a prevailing view that this is direction one should take.... The Republicans in charge of the House, they have lots of different proposals. Some would get rid of the income tax altogether. Some would go to a very flat tax, some would go to a fair tax. You don’t have an underlying premise that is consistent. And then you don’t have trust between the two parties.

There, in two paragraphs, is the political problem. Yet, influential lawmakers on Capitol Hill are staking out their ground in the event the stars do align in 2017.

Senior Senate Finance Committee Democrat Ron Wyden (D-OR) has proposed a series of relatively modest housekeeping reforms that he thinks could garner bipartisan support in the coming years.

Over the next month, we may see several more proposals. Finance panel Chair Orrin Hatch (R-UT) may roll out his proposal for business tax reform, which will be based on a plan to end double-taxation of corporate dividends. At the same time, House Republicans promise their own tax reform blueprint, though it remains unclear just how comprehensive it  will be. This will be just one part of a broader policy agenda that House Speaker Paul Ryan (R-WI) promises to release through the month. Yet, as Janice said, individual lawmakers are all over the lot.

And then there are the likely major party presidential candidates. Donald Trump has proposed a massive $9.5 trillion tax cut, but it is based on the existing tax code and includes no real structural reform. Similarly, Hillary Clinton has proposed many modest tax subsidies for education, health care, and the like, as well as tax hikes on investors, high-income taxpayers, and business. But, like Trump, she has avoided anything that looks like broad-based reform.

Would either Trump or Clinton embrace a tax reform that is initiated in Congress? They might, if it looked like a political winner. But would lawmakers be willing to get out in front of a plan that would certainly create losers, as well as winners, without some assurance that the president would be there to back the proposal? As Janice suggests, that’s less likely.

For now, we are at what looks like the early stage of a sumo match, at least on Capitol Hill. Each side is throwing salt and stamping their feet. But will the contest ever really get started? That’s harder to say. But I wouldn’t bet against Janice.

This article first appeared at TaxVox.

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