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Pennsylvania senators are able to find common ground on tax reform

Changes afoot

The Senate Finance Committee has met 10 times since March to discuss reforming the tax code. The topics:

• Simplifying the tax system for families and businesses

• Business investment and innovation

• Family, education and opportunities

• Infrastructure, energy and natural resources

• International competitiveness

• Economic and community development

• Economic security

• Types of income and business entities

• Tax-exempt organizations and charitable giving

• Non-income tax issues and related reforms

Source: Senate Committee on Finance

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Convinced the economy is the most important domestic issue facing the country, Sen. Bob Casey sought to move to the powerful Senate Finance Committee that is developing a proposal to reform America's tax code.

Finance committee work puts the Scranton Democrat and his Republican colleague from Pennsylvania, Sen. Pat Toomey, on the front line of changing the way the government collects and manages taxes, Casey told the Tribune-Review.

The two senators often split ideologically on hot-topic issues such as immigration and same-sex marriage, but on matters of finance, they've come together.

“The committee has the most substantial impact on the economy in the country, especially in a state like Pennsylvania with its diverse industries,” Casey said.

Tax reform might include reducing levels of taxation, simplifying the system for families and businesses, or making it more accountable. Among issues the committee has debated is the uncertainty that temporary provisions cause.

The tax code has been amended more than 15,000 times since 1986, according to a 2010 report by the President's Economic Recovery Advisory Board, and more than 60 tax provisions expire in 2013, making it difficult for business taxpayers to plan.

Americans spend hundreds of billions of dollars on tax compliance and regulation, said Charlie Gerow, a Republican media consultant in Harrisburg.

“That is just crazy,” Gerow said. “Some estimates show the cost of compliance and preparation is 30 percent of total tax revenue — essentially, you are pouring money down the drain.”

Casey switched from the Senate Foreign Relations Committee six months ago to join Toomey, a freshman from the Lehigh Valley, on the committee that considers taxation, tariffs and import quotas, debt, health programs under the Social Security Act, and other matters.

The committee's jurisdiction is unparalleled in Congress, said Toomey, pointing to such responsibilities as federal spending, trade policy and anything tax code-related. He's convinced the committee “is in a great position to encourage pro-growth policies, and the best example is that it can rewrite the tax code. We can do that in a way that creates more investments and job creation for startups.”

The committee works on structural changes to stabilize big entitlement programs — and that, he said, “is pro-growth for the economy in general.”

Senate leaders assigned Toomey, a former investment banker, to the finance committee in January, and Casey in February.

Pennsylvania last had two senators on the committee in 1949: Francis Myers and Edward Martin. Though it's not common practice for a state to have two senators on a committee, said Senate historian Kate Scott, Ohio's senators, Republican Rob Portman and Democrat Sherrod Brown, are on the finance committee.

The committee's influence comes from its “strong role in crafting legislation that deals with taxes and any revenue measures, including those that are involved in federal health care programs,” said Christopher Borick, political science professor at Muhlenberg College in Allentown.

Tax policy is front-and-center of debate in Washington — “the first time in a quarter-century that we have had a serious effort in tax reform,” Gerow said.

From late March to late June, the committee met weekly to discuss tax reform option papers. Chairman Max Baucus, D-Mont., and Sen. Orrin Hatch, R-Utah, the ranking member, are pushing for a bipartisan agreement.

“A simpler tax code that spurs broad-based growth is crucial for our country to remain competitive,” Baucus said in May, when the committee was considering nominees for assistant Treasury secretaries for tax policy and financial markets.

Congress hasn't taken up tax reform since the 1980s, when Ronald Reagan was president. Since then, the tax code has burgeoned to nearly 12,000 pages of provisions, regulations and loopholes, Gerow said.

“There has been an average of one change a day to the code in the past decade alone.”

Tax reform is a topic that enables the parties to work together, Casey said, noting that committee members and their staffs “have met 10 times outside of committee hearings to find ways to work together.” Such meetings are “how things work in Washington,” he said, not the meetings that generate press coverage or splash on Twitter.

Casey and Toomey sit together at finance meetings; neither has missed a session.

It is Pennsylvania's good fortune to have “two smart and serious” legislators willing to work together without trying to grab headlines, Gerow said.

Both senators signed onto a bill to eliminate a 2.3 percent tax on medical devices, for example, citing its impact on companies in Pennsylvania.

“There are obviously different areas where we disagree, but there is no point in dwelling on that; that really doesn't get anything accomplished,” Toomey, a conservative, said of his relationship with Casey, a moderate Democrat on social issues and pro-life Catholic.

“I look for areas where there is common ground, like a bill to repeal the medical device tax,” Toomey said. “It's a classic example of what is really important to Pennsylvania.”

Salena Zito is a Trib Total Media staff writer. Reach her at szito@tribweb.com.

 

 

 
 


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