Senators hesitant to help Hatch reform tax code

Washington • Two senior senators with no plans to run for re-election are trying to strike a monumental deal to reform the nation's antiquated tax system, but have found it difficult to get help from colleagues who look at the undertaking as a political minefield.

Sen. Max Baucus, D-Mont., and Sen. Orrin Hatch, R-Utah, had asked fellow senators to give them their thoughts by Friday before they plunge into a tax-code rewrite that will dominate their time for the rest of the year.

Their idea was to start with a "blank slate" and have senators advocate on behalf of deductions and credits they think should survive — items like the home mortgage interest deduction or the child-care credit.

Their hope was to get broad buy-in for an effort that would be a big political challenge, even without the strong partisan divisions that now exist.

But few senators wanted to participate, worried their letters would get leaked to the news media and upset interest groups defending their pet deductions.

One letter was leaked to the media, but it was from Baucus and Hatch. The senators promised their colleagues that their written advice would remain confidential until Dec. 31, 2064, a full 50 years from now. That is a move normally reserved for congressional deliberations on sensitive national-security issues.

They also decided to start holding one-on-one meetings, particularly with their colleagues on the Finance Committee, to spearhead the process.

Still, some senators are not interested in helping them create a simpler tax code and that includes Hatch's home-state colleague, Sen. Mike Lee, R-Utah.

Lee is preparing his own competing tax-reform bill that he intends to release this fall.

Others were ready to offer their opinions and a few even did so publicly.

Sen. Jeff Flake, R-Ariz., released his recommendations to lower top tax rates for individuals and corporations and eliminate various business tax "earmarks."

Sen. Jay Rockefeller, D-W.Va., said tax reform should try to reduce the growing income inequality.

Senate Majority Leader Harry Reid, D-Nev., demanded that tax reform raise almost $1 trillion in new revenue during the next decade, while his Republican counterparts want to keep federal collections flat. That fight has raged throughout the administration of President Barack Obama, but Hatch said it won't bring down the reform effort.

"Understandably, there is a wide spectrum of views on tax reform, especially the revenue issue," Hatch said Friday. "While Senator Baucus and the Democrats want to use tax reform to raise revenue, my Republican colleagues and I want tax reform to be revenue neutral. This is a difference of opinion that will have to be resolved and it will be, as we work together to overhaul the broken tax code for the American people."

There's broad agreement that the tax system is too complicated. In a speech on the Senate floor, Baucus noted that the code includes 42 definitions of small business and has 15 incentives for higher education alone.

"People think they should not have to spend hours upon hours and hundreds of dollars to prepare their taxes," he said. "I, for one, agree."

Hatch said tax reform can encourage economic progress during the plodding recovery from the recession.

"While the revenue question is important, tax reform is about so much more," he said. "It's about making America more competitive, creating jobs and simplifying the tax code."

Now, Hatch and Baucus just need to convince senators in both parties that it's worth the political risk to get there.

mcanham@sltrib.com

Twitter: @mattcanham