Lawmakers across party lines agree changes to the Tax Code are needed but appear increasingly at odds with one another over how best to tackle such reform and what progress is being made to achieve it. Add to that mix the differing opinions of the Trump administration, and an uncertain path forward emerges.
House Republicans have spearheaded the recent uptick in tax reform discussions with continued reference to their tax reform “blueprint” released in June 2016. Nevertheless, the border adjustment tax (BAT), a key revenue raiser within the blueprint, has left a number of Republicans leery of throwing their full support to the overall proposal (TAXDAY, 2017/03/28, C.1). The BAT, as proposed by the blueprint, would tax certain imports, resulting in an estimated $1 trillion in revenue over a 10-year period. Senate Republicans and the Trump administration, however, have repeatedly voiced concerns over implementing a BAT system (TAXDAY, 2017/04/20, C.1).
Many Democrats continue to encourage their Republican colleagues to embrace a bipartisan path forward on tax reform, while acknowledging Democrats’ votes would not be needed if legislation successfully moves through the budget reconciliation process. Nevertheless, the GOP majority has not yet found consensus on many aspects of tax reform, agreement that will be needed to meet the 51-vote threshold required in the Senate under the reconciliation process.
There has been talk on Capitol Hill that a lack of Republican consensus could result in tax reform efforts derailing, with simple tax cuts being offered in place. And, because certain Senate rules require revenue neutrality, those cuts may be temporary at best.
Further, Treasury Secretary Steven Mnuchin indicated to the House Ways and Means Committee on May 24 that temporary tax cuts are not off the table (TAXDAY, 2017/05/25, C.1). “Permanent is better than temporary, and temporary is better than nothing,” Mnuchin told House taxwriters. Moreover, Trump’s brief, one-page tax proposal signals support of broad tax cuts, rather than comprehensive reform, some lawmakers have said.
Nevertheless, the president took to Twitter over the past weekend to announce that his tax proposal (TAXDAY, 2017/04/27, W.1) is moving along ahead of schedule. “The massive tax cuts/reform that I have submitted is moving along in the process very well,”” he said. Democrats have criticized Trump’s proposal as largely benefiting the wealthy (TAXDAY, 2017/04/27, C.1).
White House Press Secretary Sean Spicer told reporters on May 30 that Trump’s “plan for the most significant tax reform in decades continues to progress.” Over the past week, the administration has had several meetings with Congress regarding tax reform, according to Spicer. “In particular, Secretary Mnuchin met separately with the House Ways and Means Committee, Republican and Democrat members, the Freedom Caucus, and the Republic Study Committee,” Spicer told reporters.
By Jessica Jeane, Wolters Kluwer News Staff
For an in-depth review please see the attached Practitioner’s Corner article.