WASHINGTON, DC-The spreading scandal over the reports that the IRS targeted conservative political groups for special scrutiny will, when it's all said and done, likely accomplish many things: new safeguards to prevent something like this from happening again will surely be put into place; the Obama Administration will certainly have spent several months on the defensive, squandering precious time before the lame duck sets in.
And then there is this: the one initiative that seemed to have a prayer of meaningful bipartisan action this year -- comprehensive tax reform -- will be dead. DOA. Not to be resuscitated until after the election, the 2016 election that is.
"You can forget it," David Johnson, principal of Strategic Vision, tells GlobeSt.com. "It did seem promising several weeks ago but right now Republicans, fairly or unfairly, smell blood in the water. Even moderates like Susan Collins are calling for heads to roll."
At the start of the year it was difficult to imagine that anything significant could be accomplished; after all the 2013 kicked off with a last minute negotiation to avert the fiscal cliff. Tempers flared; feelings were bruised; oaths were sworn not to concede to the enemy ever again. Yet there was, at the same time, a realization that the time was ripe for comprehensive tax reform. Then, when Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee, announced he wouldn't run for re-election, hopes were really raised. Comprehensive tax reform has been a long-held goal of his and freed from the pressure of re-election, Baucus vowed to focus on that.
All of this was good news to the business community -– except for when the Congress' spotlight fell on their particular tax break. Then, behind the scenes, people would get nervous. And to be frank, the commercial real estate industry does have plenty to be nervous about in any kind of tax overhaul. For instance, as improbable as it would be, the REIT tax exemption could be rescinded. The tax characterization of carried interest would almost surely be changed.
Proponents of these measures, though, can now relax. From now until the end of the term, Congress will be focusing on the IRS, but not in the way that comprehensive tax reform advocates had hoped, Johnson says. "There will not be one Republican that will want to be seen cutting a deal over taxes or anything related to the IRS."
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