Legislative Updates: November 2013
If you live in a home with large deciduous trees in your yard you know that raking the leaves can be a Sisyphean task. You can spend hours bagging leaves one day only to wake the next morning to see the yard covered again. Tax reform is a similarly Sisyphean task.
Several years ago, House Ways and Means Chairman Dave Camp (R-Michigan) undertook a process to enact comprehensive tax reform, and has worked with Senate Finance Chairman Max Baucus (D-Montana) over the past year to generate support for this endeavor. Chairman Camp even released draft legislation that would significantly modify several different parts of the tax code. Hearings were held this spring and both the Committees and their staffs worked diligently on comprehensive tax reform.
However, a number of unanticipated obstacles have been placed in the path of comprehensive tax reform legislation during 2013. In mid-May, the IRS scandal, related to its apparent targeting of the tax-exempt conservative groups, pulled the attention of the Ways and Means Committee away from tax reform. In October, the government was shut down for the first half of the month and many Congressional staffers were laid off during that time. Now the Ways and Means Committee, along with the rest of the House Republican caucus, is knee-deep in dealing with the Affordable Care Act rollout.
Although there were just 15 legislative days left in 2013 as of mid-November, Chairman Camp stated as recently as October that he would like to pass a bill out of his Committee by the end of the year. On November 14 he met with a skeptical House leadership to update them on his plans and get their feedback on whether the full House will support tax reform.
Speaker John Boehner has met regularly with the Chairman and says he strongly encourages tax reform, but is noncommittal about specifics. As for Camp, he emerged from the meeting giving strong signals that he now realized he would not be able to pass a bill in 2013 but perhaps in January or February. “We’re going to move ahead on the bill and continue to refine it,” he said. “I’m not going to make a prediction on [the timing] right now.”
On the Senate side, the Senate Finance Committee, starting in March, published “option papers” outlining “a whole host of ideas to change various aspects of the tax code.” The papers have yet to materialize into legislation, and several roadblocks have emerged in Chairman Baucus’s drive for tax reform. The biggest roadblock came in the form of Senate Majority Leader Harry Reid (D-Nevada) publicly insisting earlier this year that any tax reform legislation considered by the full Senate include significant revenues.
Raising revenue through tax reform is obviously a non-starter in the House, so Chairman Baucus has yet to decide what will be included in his Committee’s legislation. Based on recent media reports, he could end up putting out draft proposals on individual topics, such as reforming the tax on foreign profits that corporations pay, instead of one big tax reform bill. Republicans are insisting on a larger overhaul instead.
In financial industry regulatory news, CFTC Commissioner Bart Chilton figuratively jumped into the pile of the Obama Administration’s nicely raked leaves on November 5 by announcing his surprise resignation from the CFTC at the end of the year. Combined with the upcoming departure of CFTC Chairman Gary Gensler and the ongoing vacancy of the seat formerly held by Commissioner Jill Sommers, his resignation portends massive changes for the CFTC.
President Obama has nominated Treasury Department official Tim Massad to replace Chairman Gensler. No word yet on when his nomination will be considered by the Agriculture Committee, but it is unlikely that Massad will be confirmed by the full Senate before the end of the year. Additionally, the nomination of J. Christopher Giancarlo to replace Commissioner Sommers, who left in August, may not be taken up by the full Senate prior to 2014. As of now, the CFTC will have just two out of five Commissioners left by January, and they happen to be on opposite sides of the political divide.
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