Hatch Lays Out Path Ahead on Tax Reform

Utah Senator Says, “I will continue to gather their input with an eye toward crafting a tax reform bill and moving it through the committee this fall. Once again, the committee process is going to be robust - I intend to hold multiple hearings and full markup.”

WASHINGTON – Following a joint statement by tax reform principals in the Senate, House and administration, Senate Finance Committee Chairman Orrin Hatch (R-Utah) today laid out the path ahead on comprehensive tax reform.

“I’ve been working on tax reform for more than six years now, and this is the first time that we’ve had anything approaching this level of unity across the various chambers and branches of government,” Hatch said. “…The Finance Committee is already hard at work. We’ve been talking about specific reform proposals for months now, and every member on the majority side of the committee is ready to do the work. And, more broadly, the Committee has been at work in a bipartisan way on tax reform for many years now.”

Hatch continued, “We have a number of great members on the Finance Committee, all of whom – at least on the Republican side – are committed to working toward this effort. I will continue to gather their input with an eye toward crafting a tax reform bill and moving it through the committee this fall. Once again, the committee process is going to be robust – I intend to hold multiple hearings and full markup.”

The full remarks as submitted to the Congressional Record:

Last week, I joined the Senate Majority Leader, the Speaker of the House, the Chairman of the House Ways and Means Committee, the Treasury Secretary, and the Director of the National Economic Council in issuing a Joint Statement on Tax Reform.

I ask unanimous consent that the text of the joint statement be included in the record at the conclusion of my remarks.

Since the statement’s release, critics and naysayers have said quite a bit, some even going so far as to declare their opposition to the statement. That, Mr. President, is a little odd, given that the statement is not a bill or a tax plan, it is simply a statement of agreed upon principles for tax reform.

That’s not to say it was insignificant. Quite the opposite, in fact. The joint statement is an important development in the overall tax reform effort for several reasons.

For example, over the past several months, the favored tax reform narrative among some in the pundit class has been that Republicans are deeply divided. According to this narrative, Republicans in the Senate, the House, and the administration all have such fundamentally different views on tax reform that it will be impossible for us all to get on the same page.

Some of that was, to use an outdated description, pure poppycock.

When the administration puts out a framework that calls for a 15 percent corporate tax rate while the House Blueprint has a 20 percent rate target, that’s not really a disagreement. Both sides want to lower the corporate rate significantly, and the general idea in both cases is to reduce the rate as much as is reasonably possible.

But, admittedly, there were some key differences of opinion. And, at the outset of this Congress, with a newly elected Republican President, it was fair to say that the House, Senate, and White House were on different pages when it came to some aspects of tax reform.

However, with last week’s release of the joint statement, the leaders in this effort – in both congressional chambers and in the executive branch – have declared that, as of now, we are singing off the same song sheet. There are, of course, details that will need to be worked out, but all parties are in agreement on the key principles and have enough confidence that the process can move forward in Congress without the fear that the House, Senate, or administration will take drastically different approaches in crafting a tax reform package.

That’s very significant, Mr. President. I’ve been working on tax reform for more than six years now, and this is the first time that we’ve had anything approaching this level of unity across the various chambers and branches of government.

Another significant marker in the joint statement is the agreement that the tax-writing committees will do the lion’s share of the work in producing the actual tax reform legislation and that the leaders are committed to moving through regular order, by which I mean committee markup processes prior to floor consideration.

This is key, Mr. President, because one of the criticisms I’ve heard about Republicans’ tax reform efforts is that the bill is being drafted behind closed doors. I’ve even been scolded, sometimes pointedly, over why I have not held a Finance Committee hearing on “the bill,” even though there is no complete bill in place at this time.

Outside groups, some overtly aligned with the Democrats, have already put forward budget scores for the House Blueprint and the president’s tax framework, even though there are not enough specifics in place to score anything yet. And those scores, generated by whatever is in the imagination of the outside groups, and not based on any facts, tell tall tales. They say there will be tax cuts for the rich, big businesses, and a parade of horrors. Democrats here in the Senate, as well, have spoken of the horrors of the Republican “tax plan,” even though there is not a detailed plan in place. And, again, the horrors represent pure fiction.

Mr. President, it is simply not the case that a bill is being drafted behind closed doors. It was never going to be the case – I’ve stated several times in recent months that I intended to have a robust and transparent process for tax reform in the Senate. The joint statement confirms that both chambers of Congress will take that kind of approach.

The Finance Committee is already hard at work. We’ve been talking about specific reform proposals for months now, and every member on the majority side of the committee is ready to do the work. And, more broadly, the Committee has been at work in a bipartisan way on tax reform for many years now.

We have a number of great members on the Finance Committee, all of whom – at least on the Republican side – are committed to working toward this effort. I will continue to gather their input with an eye toward crafting a tax reform bill and moving it through the committee this fall. Once again, the committee process is going to be robust – I intend to hold multiple hearings and full markup.

The joint statement also noted that Republican leaders hoped that our Democratic colleagues would be willing to participate in this effort. That should be no surprise. I’ve been calling on my Democrat friends to work with us on tax reform for months, even years. For months now, I’ve come to the floor on multiple occasions to ask my Democratic friends to come to the table.

I held a bipartisan hearing on tax reform in the Finance Committee just a few weeks ago, where we heard from experts on both sides of the aisle.

Earlier this week, the committee had another bipartisan hearing, this one on affordable housing. Of course most of the federal affordable housing incentives are found in the tax code, meaning that issue will undoubtedly be part of the larger discussion.

These hearings are just the latest in very long line of bipartisan, tax-related hearings in the Finance Committee.

So, there really shouldn’t be any doubt that when I sign onto a statement that includes a call for bipartisanship, the call is both serious and sincere.

In addition, there is quite a bit of bipartisan agreement over the policy principles noted in joint statement.

As I said here on the floor just a few weeks ago, a number of Democrats – including a number of our Senate colleagues and the two most recent Democratic presidents – have expressed support for lowering the U.S. corporate tax rate, which is the highest in the industrialized world.

Prominent Democrats, including the distinguished Minority Leader, have publicly supported reforms to our international tax system in order to make American businesses more competitive and prevent erosion of our tax base.

Both of these concepts are prominently mentioned in our joint statement.

The statement also talks about tax relief for middle-class families and reduced burdens on small businesses. Democrats, last time I checked, were largely in favor of this as well.

So, long story short, Mr. President, there is nothing in the statement, either in terms of process or policy that should discourage a number of Democrats from getting on board with this effort.

Yet, earlier this week, every member of the Senate Democratic Caucus – except three – signed onto a letter they purported to be a call for compromise and bipartisanship. However, if you read the details of the letter, it was really a set of up-front demands peppered in between political attacks.

First and foremost, my colleagues demanded in their letter that Republicans not use budget reconciliation to move a tax reform bill.

That has been a precondition for Democratic involvement in this effort for months now, among other demands unrelated to tax reform, and, as I’ve said many times, it’s preposterous. The demand that Republicans agree upfront to a particular process is really unprecedented, and, not to put too fine a point on it, a little nonsensical.

If Democrats are willing to engage in good faith on tax reform, why would they first demand that we ensure their ability to block it from ever even coming to the floor before they’d be willing to engage on the substance? The logic is a little dizzying, Mr. President, to say the least.

On top of that, if reconciliation remains on the table, why would that stop Democrats from agreeing on the substance?

Obviously, budget reconciliation gives the majority the tools it needs to move legislation – under specified rules and conditions – without the threat of a filibuster. But, nothing in the rules requires reconciliation to be partisan. In fact, historically speaking, tax bills moved through reconciliation tend to get bipartisan support. For example, the so-called Bush Tax Cuts of 2001 and 2003 were passed through reconciliation, yet there were both Republicans and Democrats voting in favor of the package.

And recent history shows that working together on the substance of policy is not precluded by the existence of a reconciliation instruction.

In 2009, with a reconciliation instruction in place, Senate Republicans in the Finance Committee participated in the health care reform process, with hearings, roundtables, and bipartisan discussion groups, before we were shut out of the final Obamacare bill. Republicans did not operate as though there was a prerequisite of no reconciliation before discussion could occur.

In 2013, with a $1 trillion tax-hike reconciliation instruction in place, Senate Republicans in the Finance Committee participated in discussions that produced 10 bipartisan tax option papers; we participated in what was called a “blank slate” approach to tax reform; and we participated in discussion draft conversations. Republicans did not operate as though there was a prerequisite of no reconciliation before discussion could occur.

Yet, now, our friends on the other side are critical of us when we follow the path they themselves took. They are insisting that we do what they would not do when similarly situated. And they are not participating on the same constructive basis we did when we were in their place. From their leader on down, they act as if the past does not exist or that we are ignorant of it. Before applying too clever a rhetorical lash to those on this side, my friends on the other side should heed the advice of Lord Byron: “Keep thy smooth words and juggling homilies for those who know thee not.”

If Democrats will work with us to reach agreement on the substance of tax reform, the process by which it moves through the Senate shouldn’t really be a concern. Any implication that the process will necessarily dictate the substance is misleading.

Ideally, the tax reform process would be bipartisan, particularly here in the Senate. That would be the best-case-scenario for the effort.

In a perfect world, reconciliation would not be necessary.

But, for that to happen, the Democrats would have to be willing to engage in a reasonable manner. And, in my view, opening the discussion with a demand that Republicans unilaterally disarm and commit to not using the tools we have under the Rules of the Senate—the very tools that have been used by both sides in the past—smacks of disingenuousness. If they are truly willing to engage constructively on these efforts – and I hope they are – we should begin by talking about the substance, not dealing with process demands.

I hope that what we’re seeing is posturing.

I hope that my Democratic colleagues will recognize the significance of the unity expressed in last week’s joint statement and get on board for what will hopefully be a historic effort.

If they do not, Republicans should be willing to use the tools at our disposal to move tax reform without Democratic support. That would include reconciliation.

The Majority Leader has indicated that he’s willing to go that way. I’m willing to go that way as well.

However, to get us to the point, a number of things have to happen, not the least of which is the passage of budget resolution. For now, I’m focusing on the substantive policies and proposals and I will keep working with my colleagues on the Finance Committee to deliver on the tasks we were charged in the Joint Statement.

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