At a U.S. Senate Finance Committee (the "Committee") hearing, Committee leaders and industry experts debated recommendations for individual tax reform.
Committee Chair Orrin Hatch (R-UT) criticized Democrats for efforts that he said have been made to block Republican attempts to develop a bill. He characterized the Democrats' request for a series of process demands as "unreasonable," and expressed hope that Democrats would abandon such demands to work towards finding "common ground." Senator Hatch also rejected speculation that Republicans are drafting a "secret tax reform bill," and said that a bill will be written by a group of tax-writing committees. Republican efforts, Senator Hatch vowed, will be "focused squarely" on facilitating relief for middle-income taxpayers. He backed several potential changes, including expanding the standard deduction and increasing and enhancing the child tax credit, as well as other efforts to simplify the tax code.
Committee Ranking Member Ron Wyden (D-OR) argued that the details of Republican tax plans do not line up with the stated goals to help the middle class. Senator Wyden claimed that President Trump declared there would be "no breaks for the wealthy," yet supports a pass-through proposal that would function as a "scheme for the wealthy to dodge paying their taxes." He asserted that middle- and lower-income earners are forced to adhere to a "strict set of rules" while "there's another set of rules for the most fortunate." Senator Wyden objected to plans that would remove state and local tax deductions ("SALT"). Republican tax reform, Senator Wyden suggested, would "gore" middle-class earnings to facilitate further breaks for wealthy Americans.
New York University School of Law Professor Lily L. Batchelder contended that any tax reforms should enhance progressivity. She advocated for expanded tax credits, a restructuring of child-care benefits, tax incentives for retirement savings, and reducing tax benefits for the wealthy. She said that reform efforts should focus on simplification as well, and favors eliminating opportunities for "savvy" taxpayers to "game the system" through "loopholes." Professor Batchelder condemned Republican efforts as moving in the "opposite direction."
Alex M. Brill of the American Enterprise Institute encouraged lawmakers to broaden the tax base in order to move toward a simpler tax code. He said that a new tax plan should focus on eliminating "horizontal inequity," i.e., taxpayers who earn similar amounts of income being taxed at vastly different rates. Mr. Brill called for a complete repeal of the SALT deduction, which he said could raise over a trillion dollars in additional revenue over a decade. Ramesh Ponnuru, also of the American Enterprise Institute, suggested that reform should support tax relief for parents through expanded child credits. In that way, Mr. Ponnuru stated, tax reform would be "both pro-growth and pro-family."
Iona Harrison, chair of the Federal Taxation Committee of the National Association of Realtors, advocated for tax reform efforts that encourage and support homeownership. She expressed opposition to making significant changes to housing and real estate tax rules, and warned that a "quest for simplicity must not be allowed to override common sense."
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