May 17, 2015

U.S. Senate Finance Committee Discusses Tax Reform

According to Politico’s “Morning Tax,” in a closed door meeting members of the U.S. Senate Finance Committee debated the merits comprehensive versus corporate tax reform last week. Participants described the meeting as “tense.” 

In a statement to the press after the meeting, Sen. Robert Menendez (D-NJ) argued for comprehensive reform. He said, “I think there's a lot of desire to look at individual rates as well as other elements of the code. I think it's very difficult to surgically extract one and leave the rest of it in place.” (Note: Sen. Menendez did not say whether he supported an increase or a cut in individual rates.) Sen. John Cornyn (R-TX) said he thought Congress should consider the issue in phases, starting with reform of the corporate tax structure. 

MSCI continues to argue that, in order to make the tax code fairer and to improve competitiveness for all businesses, federal tax reform must reduce both the corporate and individual income tax rates. Indeed, MSCI Vice President of Finance and Government Affairs Jonathan Kalkwarf argued for comprehensive reform at a roundtable last week held by the American Council on Capital Formation. Kalkwarf said, “We believe corporate-only reform wouldn’t help the 94 percent of U.S. business that pay taxes through the individual system since they would still pay much higher rates than their global and U.S. corporate counterparts. It would actually make their competitive situation much worse.” 

Representatives from the Senate Finance Committee, including Sen. Ben Cardin (D-MD) who chairs the committee’s business tax reform working group, attended the roundtable. 

As a reminder, MSCI also recently wrote to Senate Finance Committee Chair Orrin Hatch (R-UT) and House Ways and Means Committee Chair Paul Ryan (R-WI) to argue for comprehensive reform. Last week, the two chairs responded to MSCI in a letter. Chairman Hatch and Chairman Ryan said they would likely pursue corporate-only tax reform, but assured MSCI members that they would “not leave behind family and closely held businesses organized as pass through entities.” 

The two also solicited MSCI’s ideas for tax reform. If you would like us to pass your thoughts about this important issue on to the chairmen, please don’t hesitate to contact Jonathan Kalkwarf to discuss.