* First major speech on tax reform by Baucus
* Year-end tax rate decisions loom
* Baucus up for re-election in 2014
By Kim Dixon
WASHINGTON, June 4 The chairman of the U.S.
Senate tax-writing committee promised to spell out ideas for
revamping the tortuous U.S. tax code next Monday, providing a
glimpse of the influential lawmaker's plan for major fiscal
decisions looming at the end of the year.
Senator Max Baucus, the Finance Committee chairman, will
deliver "a vision for tax reform" on June 11 at the Bipartisan
Policy Center, his office said.
Democratic President Barack Obama and most lawmakers from
both major political parties say they want a tax code overhaul,
generally defined as a lowering of rates coupled with a
narrowing of specialized tax breaks.
The devil will be in the details, such as how low to trim
rates, which tax breaks to curb, and whether a revamp will raise
revenue or not.
While tax reform is expected to take years, several
deadlines at the end of the year will force action on some items
- particularly expiring individual tax rates enacted under
former president George W. Bush in 2001 and extended under
Democrats and liberal groups are in a minor scuffle over
that issue after House Democratic leader Nancy Pelosi called for
a vote on extending historically low individual tax rates for
only those with income of less than $1 million.
Obama and nearly all Democrats have taken the stance that
the wealthy can afford to pay more in taxes, and have called for
letting lower rates lapse for households earning $250,000 or
"This could be meaningful if Baucus says where the red line
is for him," said Helen Fessenden, an investor analyst who
watches Congress for Eurasia Group.
All of the lower individual tax rates expire at the end of
the year unless Congress acts. Action is not expected until
after the Nov. 6 presidential and congressional elections.
Baucus, a moderate Democrat from Montana, has been holding
hearings for more than a year on the topic, but has not spoken
extensively on it. He is up for re-election in 2014.
He will deliver a speech to the Bipartisan Policy Center, a
think tank founded by former Republican Senator Pete Domenici
and Democratic budget expert Alice Rivlin.
The BPC has called for cutting top individual rates from 35
percent to 28 percent, and trimming the top corporate rate from
35 percent to 28 percent. Their plan also curbs housing and
charitable contributions deductions for the wealthy.
Baucus's committee has responsibility over tax policy.
Ironically, he was one of the Senate Democrats who helped Bush
win passage of his 2001 cuts.
The Republican-led House is planning a series of votes on
extending all of the lower rates this summer, seen as political
votes with little chance of becoming law.
"If the House is prepared to take a handful of show votes on
taxes this summer, it is a great idea for Senator Baucus to
begin laying out some Democratic alternatives," said Jim Manley,
a former top aide to Senate Majority Leader Harry Reid.
The chief tax writer for Republicans, Dave Camp, released a
blueprint last year for revamping corporate taxes, including
cutting the top rate to 25 percent from the current 35 percent.
Nearly every Republican wants to keep individual rates as
t hey are by extending the Bush-initiated cuts for everyone.
Extending all of the lower tax rates will cost several
trillion dollars in revenue over a decade, a problematic
prospect when budget deficits have topped $1 trillion several
years in a row.
The Senate panel led by Baucus has not put forth any
proposals of its own, and many people don't expect a lot of
details from Baucus before the election.
"I'm expecting something bigger-picture, rather than a lot
of details," said Cathy Schultz, a lobbyist for big
A Baucus aide said he will describe a framework for tax
reform and how that might fit into deficit reduction.
Democratic and liberal groups want Baucus to push back
against business arguments that corporate rates should be
slashed without giving up many tax breaks.
"What I hope is that it looks at economic competitiveness
but also the importance of the corporate income tax as a revenue
source," said Michael Ettlinger, a fiscal expert at the Center
for American Progress, a Democratic think tank.