Senators to corporate interests: Want to keep that tax break? Convince us.June 27, 2013: 12:52 PM ET
Tax writers have announced a "blank slate" approach to the tax code overhaul.
By Tory Newmyer, writer
FORTUNE -- Corporate tax lobbyists should cancel any vacations they planned to take next month. That's the upshot of a letter the Senate's two leading tax writers sent their colleagues today to put them on notice that their overhaul of the code is starting from scratch. In other words, every corporate carve-out -- for Puetro Rican rum distillers, NASCAR racetrack builders, Hollywood studios, yacht makers, solar panel producers, and dozens of others -- will now need to find a Senate sponsor to justify its existence.
The so-called tax expenditures cost the Treasury more than $1.1 trillion a year, and there is bipartisan agreement on Capitol Hill about sweeping them off the books to finance lower overall rates. Or in principle, at least. The complication is that what looks to one lawmaker like pork is to another a needed protection for a treasured home-state industry. So Senate Finance Chairman Max Baucus (D-Mont.) and the panel's top Republican, Orrin Hatch (R-Utah), are putting the burden on their fellow Senators to make the case for any loopholes they want preserved.
"To make sure that we clear out all the unproductive provisions and simplify in tax reform, we plan to operate from an assumption that all special provisions are out unless there is clear evidence that they: (1) help grow the economy, (2) make the tax code fairer, or (3) effectively promote other important policy objectives," they write, according to a copy of the letter obtained by Fortune. "Today, we write to ask you to formally submit legislative language or detailed proposals for what tax expenditures meet these tests and should be included in a reformed tax code, as well as other provisions that should be added, repealed, or reformed as part of tax reform."
The deadline for submissions is July 26, which means K Street needs to get cracking, now. There is a certain amount of theater behind the move, and the lead tax-writers are doing what they can to generate momentum for a reform push facing long odds in this Congress. But that doesn't mean corporate interests looking to protect favored treatment in the code should take this summons lightly.