Why Congress Is Throwing in the Towel on Tax Reform
Policy + Politics

Why Congress Is Throwing in the Towel on Tax Reform

© Gary Cameron / Reuters

Despite promises of an ambitious legislative agenda meant to influence the 2016 presidential election and boost the U.S. economy, the GOP’s top two lawmakers on Tuesday ruled out any chance of comprehensive tax reform happening next year.

“Getting it done in 2016? That’s not going to happen because Barack Obama is president,” House Speaker Paul Ryan (R-WI) said during an event hosted by Politico.

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The admission comes less than two weeks after the newly-elected speaker gave a major address in which he laid out his vision for a more “confident America.” The speech mentioned eliminating tax loopholes and lowering rates but was short on specifics. Ryan’s comments on Tuesday suggest he’s throwing in the towel, at least until someone new is in Oval Office.

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He isn’t alone. Speaking separately at the same event, Senate Majority Leader Mitch McConnell (R-KY) also threw cold water on the idea of revamping the U.S. tax system next year, though he didn’t drown it the way Ryan did.

“There are some challenges in doing comprehensive tax reform with this president,” he said, adding he believed any overhaul “should be revenue neutral to the government.”

“We need to go to some kind of territorial system and from my point of view we need to treat taxpayers as nearly as we can, similarly,” said McConnell. He then said that small businesses should be taxed at the same rate as large ones.

He stressed that any extra revenues produced by tax reforms should be used to reduce tax rates, not spent by the government.

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That stance is likely a non-starter with the White House, which has pushed for years to increase the tax rates for wealthy individuals.

Earlier in the event, the Kentucky lawmaker shrugged off a suggestion that the upper chamber would come to a standstill because 2016 is an election year, but it’s not hard to imagine that holding out until 2017 is all about politics.

Republicans don’t want to hand a lame duck president a major legislative victory in the midst what is sure to be a divisive campaign, and instead are hoping Election Day goes the GOP’s way and that both houses of Congress stay in their hands.

While the Senate is up for grabs next year, the House is not, which is why Ryan was able to shut the door more firmly than McConnell on the idea of a tax reform package.

However, both men dodged when pressed if they would be willing to work with the administration to pass “narrow” tax reform.

“I don’t know. I don’t know,” McConnell said.