10 Updates
Goodbye Baucus, Hello Wyden
Photo Credit: Forbes Business

Goodbye Baucus, Hello Wyden

Jan 6 2014, 1:33pm CST | by

In 1976, when Daniel Patrick Moynihan was first elected to the Senate, he opted for a seat on the Senate Finance Committee. When asked why, he responded, Willie Sutton-like , “Because that’s where...

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29 weeks ago

Goodbye Baucus, Hello Wyden

Jan 6 2014, 1:33pm CST | by

In 1976, when Daniel Patrick Moynihan was first elected to the Senate, he opted for a seat on the Senate Finance Committee. When asked why, he responded, Willie Sutton-like , “Because that’s where the money is.” The Senate Finance Committee  has jurisdiction over 99 percent of all revenue collected by the federal government and about half its spending. Moynihan became chair of Finance (as Capitol Hill people call it) in 1993 and 1994 and remained the top Democrat on the committee until his retirement in 2000. The current chair, Democrat Max Baucus  of Montana, has been the chair or ranking minority member ever since.

Much to the credit of its leaders, power on the Finance Committee is generously shared with the party in the minority. So when control of the Senate changes from one party to another, the chair of Finance may change, but the ranking minority member is not shunned to obscurity and stripped of staff (as happens in the House Ways and Means Committee), but retains almost as much influence as the chair. So for the last 13 years, Baucus has been the Senate’s number one or number two taxwriter, depending on which party is in control.

Baucus won’t complete the last year of his final Senate term that ends in 2014 because President Obama is appointing him  ambassador to China. (In addition to handling all the money, Finance is also in charge of trade policy.) Sen. John D. Rockefeller IV of West Virginia , the next most senior Democrat, is retiring at the end of 2014 and is not interested in being Finance chair for the waning moments of his 30-year Senate career. That means 62-year-old Ron Wyden  (D) of Oregon will be the next chair  of the Finance Committee.

Much of the criticism you hear about Baucus has come from the left wing  of his party, which complains about his conservative stance on many issues. That always struck me as a little silly. Montana is a solidly red state. Obama lost it by 15 percentage points in 2012. Democrats are lucky to have a senator from Montana. They will miss Baucus when he’s gone in 2015 if - as seems increasingly likely  - they lose control of the Senate and Wyden will have to change places with current ranking minority member Orrin Hatch  of Utah.

The real problem with Baucus is that for 13 years he has occupied a powerful and prestigious position of leadership on the Finance Committee, but until recently, he has made no measurable progress on tax reform. He has given a lot of speeches on competitiveness. He has held a lot of hearings. But until the recent release of four tax reform discussion drafts — on international tax tax administration depreciation , and energy incentives  – he has done little to make the tax code simpler, fairer, or more efficient.

For example, in January 2006 he gave a speech at the National Press Club in which he stated:

The tax code rightly contains a number of anti-abuse rules, so that companies cannot shelter passive income. We must also allow U.S. businesses to redeploy resources from active foreign corporations, as their competitors already do. I will review those rules, as well as the transfer pricing rules, cost recovery periods for business assets, and the inappropriate use of offshore tax havens, to make sure U.S. businesses are able to compete fairly and on a level playing field with both domestic and foreign competitors.

That was all big talk and no action. With all the resources and power of the committee at his fingertips, it took Baucus seven years to release a preliminary “staff discussion draft”  on international reform. This only came more than two years after House Ways and Means Committee Chair Dave Camp released his pioneering international tax reform discussion draft . It came only after a huge surge of public interest in tax reform  in general and in international issues in particular . On tax reform, Baucus clearly has been a follower, not a leader.

In 2005 the Finance Committee had a real opportunity to make progress on the most controversial issue in corporate taxation: multinationals’ profit shifting to tax havens through aggressive transfer pricing. For over a year the committee staff had been conducting an in-depth investigation of the IRS advance pricing agreement program, under which many transfer pricing cases were being settled. Baucus said before the study’s completion: “I encourage interested parties to wait and review the full report before drawing any conclusions from the APA program.” But the study, reportedly highly critical of the IRS program, was never reviewed by anybody in the public because it was never released!  Leadership on this critical issue, by default, passed to a non-taxwriting committee, Michigan Democratic Sen. Carl Levin’s Senate Homeland Security and Governmental Affairs Permanent Subcommittee on Investigations. Levin’s multiyear efforts culminated this May with a hearing on Apple’s transfer pricing practices . Again, Baucus has not been a leader.

In contrast, Wyden made tax reform a signature issue many years  before Bowles-Simpson  put it on the front burner. In many ways he is like a modern-day Bill Bradley, who, as a Democrat on the Finance Committee, devoted himself to tax reform long before anybody thought that tax reform in the 1980s was possible.

Moreover, unlike so many other tax reform cheerleaders who are afraid even to hint as to how they would pay for tax reform, Wyden developed a detailed plan with specific revenue raisers. And even better, he did it with Republican cosponsors -— first with Sen. Judd Gregg  before he retired in 2010 and then with Sen. Dan Coats  (R) of Indiana.

Probably nobody has been more skeptical  about the chances of enactment for tax reform as I have. So I am not inclined to give readers a lot of happy talk about its chances. But I believe the emergence of Wyden will do a great deal to raise the profile of tax reform on Capitol Hill. Republicans are always interested in tax reform. What tax reform has been missing is a devoted Democrat. Even if Wyden loses chairmanship of the committee in 2015 with a Republican takeover of the Senate, he has a good working relationship with Hatch. And he has a good working relationship with House Republican Paul Ryan of Wisconsin, whom he has worked with on Medicare reform. Ryan wants  to become the next chair of the House Ways and Mean Committee when Camp’s term-limited chairmanship is over at the end of 2014.

This potential alignment of the right personalities is a positive development. But nobody should mistake it as much more than a glimmer of hope for the future of tax reform. Tax reform is a brick wall shrouded in a smoke screen. Politicians and the public repeatedly plunge headlong into it and then find out how hard it really is. The political difficulties of tax reform are demonstrated by Wyden’s own plan. On the individual side, his top rate was 35 percent — hardly a showstopper that the public and other legislators can rally around. The corporate portion of his reform was far more dramatic. He reduced the rate from 35 percent to 24 percent. But that came at the cost of immediate taxation of all foreign profits, limitations on interest deductions, and elimination of the preference on capital gains and dividends. These are nonstarters in the business community and among conservatives. Certainly Wyden is determined, and he is willing to think outside the box. But the vested interests he must challenge to get any significant rate reduction still make major tax reform a quixotic effort.

Source: Forbes Business

 
Update
10

7 weeks ago

RM47mil KWSG contributions still unclaimed

Jun 9 2014 7:54am CDT | Source: Business Times Malaysia

KUALA LUMPUR: About RM47 million of contributions in the Teachers Provident Fund (KWSG) still remain unclaimed, the Dewan Raky ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
9

7 weeks ago

Gold shop lost almost RM1mil

Jun 9 2014 3:50am CDT | Source: Business Times Malaysia

KANGAR: A gold shop owner lost almost RM1 million after after the safe on in his shop was broke ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
8

7 weeks ago

Motion to debate MAS losses in Dewan Rakyat rejected

Jun 9 2014 3:39am CDT | Source: Business Times Malaysia

KUALA LUMPUR: AN emergency motion to debate the losses incurred by Malaysia Airlines last year, amounting to RM1.2 billion was rejected by the Dewan Ra ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
7

7 weeks ago

MH370 Tragedy: Hisham: RM27.6 mil spent on 1st phase of SAR

Jun 9 2014 2:11am CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia spent some RM27.6 million in its first phase of the search operations for missing Malaysia Airline flight MH370, said Acting Transport Mi ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
6

7 weeks ago

9.1m litres of diesel seized in a month

Jun 8 2014 1:11am CDT | Source: Business Times Malaysia

PUTRAJAYA: The Domestic Trade, Cooperatives, and Consumerism ministry has seized some 9.1 million litres of diesel and property worth RM58 million since mounting ‘Operasi Diesel Selatan’ in the ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
5

7 weeks ago

Girl, 9, awarded RM2.78m compensation for medical negligence

Jun 6 2014 4:56am CDT | Source: Business Times Malaysia

KUALA LUMPUR: A nine-year-old girl who suffered brain damage during her birth at a government hospital was awarded over RM2.78 million in compensat ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
4

7 weeks ago

Malaysia's total trade in April up 12pc

Jun 5 2014 11:52pm CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia's total trade in April 2014 rose by 12 per cent from a year ago to RM123.86 billion due to growing trading activities, International Trade and Industry Mi ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
3

7 weeks ago

Works Ministry to spend RM20m for upgrading works at 50 accident black spots

Jun 4 2014 11:35pm CDT | Source: Business Times Malaysia

JOHOR BARU: The Works Ministry will implement upgrading works at 50 accident prone locations in the country that have been identified this year involving an allocation of RM2 ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
2

7 weeks ago

Najib launches loan scheme for Ramadan traders

Jun 4 2014 10:24pm CDT | Source: Business Times Malaysia

PUTRAJAYA: Prime Minister Datuk Seri Najib Razak today launches RM45 million Ramadan Bazaar Scheme 20 ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
1

7 weeks ago

Residents bring up objection against Kidex to Suhakam

Jun 4 2014 4:49am CDT | Source: Business Times Malaysia

PETALING JAYA: A group of 20 Petaling Jaya residents held a meeting with the Human Rights Commission of Malaysia (Suhakam) over their objection against the proposed RM2.2 billion Kinrara Damansara Skyway (Kidex) today. ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 

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