It had almost no chance of being enacted anyway, but the comprehensive tax reform proposal that will be revealed by House Ways and Means Committee Chairman Dave Camp (R-MI) this afternoon kills even the very limited possibility that something will happen on taxes this year.
It also very likely kills the chance of tax reform in 2015 and 2016.
The reason is simple: The plan includes tax increases on key Republican constituencies. No matter how rational that might be from a numerical point of view, that's not something Camp's colleagues will be able even to tacitly approve let alone actually vote for before either the next congressional election this November or the next presidential election in 2016.
Here’s something you haven’t heard from anyone else: Tax reform is at least three years away...and even that may be optimistic. In fact, I'm not expecting a serious tax reform effort until 2017.
Note that I said "effort" rather than a bill. Comprehensive tax reform is far more likely to be enacted towards the end of the decade than it is to be in place before the 2016 presidential election.
Yes, I know that absolutely is not the common wisdom. House Ways and Means Committee Chairman Dave Camp (R-MI) has been saying all year that he wants to put tax reform on a fast track so it can be enacted this year. Just a few months ago House Republicans were threatening to make a process for tax reform the price of their supporting the next increase in the federal debt ceiling. And when Senate Finance Committee Chairman Max Baucus
(R-MT) (D-MT) announced that he wasn’t going to run for re-election, there was a flurry of speculation about how that decision would make tax reform more likely to happen this year.
From my column in today's Roll Call, here are my predictions for what's ahead next year after we deal (or possibly don't deal) with the fiscal cliff.
A Budget Crystal Ball for 2013
Don’t expect Congress to tackle a tax overhaul anytime soon
For the third year in a row I am not writing a year-in-review column because, honestly, they’re boring and unnecessary. If you’ve been interested enough in the federal budget to read my column in 2012, you already know what happened and probably don’t want to be reminded. If you didn’t care during the year, you don’t need to know now.
Besides, what’s to come in 2013 is definitely more interesting.
Whatever Congress and the White House do in the next couple of weeks will reinforce the case for tax reform. The seeming sanctification of low tax rates that occurred with the Tax Reform Act of 1986 has not meant keeping top tax rates low; it has meant only the death of honesty in talking about rates. The result is a patch work of hidden rates and additional wage taxes that is likely to continue.