Tax Reform: The Crystal Ball Never Lies
“Not before 2014,” I respond with assurance.
“How can you be so sure, Ed?” they say.
“My crystal ball never lies!
But I started getting a bit nervous about sounding so confident. After a little digging, I found out my crystal ball had once predicted that the Titanic was unsinkable, yet it went down on April 15, 1912. How’s that for foreshadowing?! That forced me to do some soul searching and thinking.
Flash back to November 2011. I was sitting next to Pat Thompson, who chaired the AICPA Tax Executive Committee. We were listening to Don Longano, former House Ways and Means Committee Chief Counsel and Washington tax insider, share his views on the prospects for tax legislation at the National Tax Conference.
Pat didn't hesitate. “He said fundamental tax reform, and I want to get ahead of it. Let's form a task force and Don should be the chair!” Pat and I cornered Don before he left the room and got our chair that day. (Truth be told, Don was an easy mark; I think he set us up.)
Don, Melissa Labant, the tax advocacy director, and the Tax Reform task force spent the remainder of that year and all of 2012 going on a Washington tax reform “listening tour.” 2012 was a presidential election year so we knew the prospects for any tax legislation, let alone fundamental reform, were slim. That knowledge allowed us the luxury to meet with congressional staff and understand what interested them and to leverage our tax policy thought leadership by focusing on administrability - a core concept of good tax policy.
So that brings us to last fall’s election, the lame duck session of Congress, debt ceiling (the congressionally mandated limit to which the Treasury Department may borrow money to fund the government), the fiscal cliff, going over the cliff for two days - to Jan. 2, 2013, and sequestration. Why was my answer “Not before 2014” when we have all of 2013 to deal with tax reform?
The answer is because a lot is left for the Hill to tackle. This spring brought House Ways and Means and Senate Finance Committees’ working groups, discussion drafts and hearings and we anticipate that those efforts will continue into the late summer or early fall. The debt ceiling will come up again – probably by late September – and the fight to connect a possible increase in the debt limit to fundamental reform has already started.
The Republicans want to tie that increase to a tax reform deal and the Democrats don’t. The Republican-controlled House could possibly move a tax reform bill to the Democratically-controlled Senate in late fall. Will that be a bill that will be easy to move in the Senate? No. Is this starting to sound familiar?
Is 2014 (if at all) starting to make sense? Stay tuned, there’s more . . .
Edward S. Karl, CPA, Vice President of Taxation, American Institute of CPAs.
Crystal ball image via ShutterStock