TAX WRITERS MEET AT REAGAN’S RANCH: On the 31st anniversary of Ronald Reagan’s tax bill, a group of House Ways and Means Committee members led by Chair Kevin Brady (R-TX) met to discuss the Committee’s efforts to undertake tax reform in 2017. Brady spoke on how challenging changing the tax code would be, but insisted they would keep fighting during this rare opportunity for real reform. The others writers had similar sentiments deliberating some of the ways the bloated tax code has burdened the U.S. economy.
- Chairman Brady, in his prepared statement, discussed the 1986 tax reform efforts and lamented, “Fairness has been replaced by outright favoritism for Washington special interests. Simplicity and certainty have been supplanted by complexity and incredible frustrations for the American people. And American competitiveness has become a casualty of Washington’s inaction.” He stressed, “Whether you’re a Democrat or a Republican, if you’re serious about getting real pro-growth tax reform done for the American people this year, we are serious about working with you.” He concluded: “We are fighting for those same fundamental principles Ronald Reagan did – the fairness, simplicity, and certainty you deserve. We are fighting for the competitiveness and excellence we are capable of
- Peter Roskam (R-IL), Chairman of the Tax Policy Subcommittee, detailed how overwhelming the tax code is for average Americans in calling for simplification of the tax code. He spoke about the growth that came from Reagan’s accomplishments.
- David Schweikert (R-AZ), discussed the “cruelty” visited upon Americans by the tax code. He said, “Don’t underestimate the word ‘simplicity.” He mostly spoke about reforms to the IRS – wanting to eliminate that sinking feeling Americans get when they send off their tax forms.
- Carlos Curbelo (R-FL) acknowledged the complicated nature of tax reform, but stressed it is mainly about American families. He said, “It’s up to us to meet the expectation of the American people and help them reach their aspirations.” He focused on removing red tape, saying the complicated nature is a barrier to entry for small businesses.
THE TAX PLAN: The opening remarks laid out the overarching objectives for tax reform but the House Republicans colored in some of the details for the full tax plan during the Q&A which is paraphrased below. Highlights include: eliminating the death tax is a main objective, charitable deductions will stay, BAT is dead, retroactive expensing in on the table as is full expensing, interest rate deductions have an uncertain fate and so does the process of non-reconciliation tax items. Read Brady’s responses below or catch the event replay here.
QUESTION: A hallmark of Reagan’s tax reform plan was a bipartisan effort. Will that again be the case?
BRADY: Democrats have good ideas and see the same issues – young people not getting good jobs and jobs being shipped overseas. They bring so much to the table. We are working in the House to explore common ground on tax reform, and would love to bring bold bipartisan reform to the president.
QUESTION: Are you looking at a partial-expensing plan with a three-year phase in?
BRADY: No, we are focusing on small businesses and the middle class. We know growth comes from the lowest possible rates to businesses large and small, when they can keep their money and reinvest it in themselves and their employees. And we know when businesses can immediately write off their investments in buildings, equipment, software, and technology it drives main street jobs.
QUESTION: Is there any discussion about making expensing retroactive?
BRADY: We are looking at ways to drive the rates to be the lowest so we can be competitive with the rest of the world. We have more work to do. I anticipate working through August with the White House and Senate, and to bring a plan forward to Ways and Means when we return.
QUESTION: Are you concerned that a side effect of eliminating the estate incentive is a reduction in charitable donations?
BRADY: People have the most incentive to give when the economy is doing well and they have extra money to give. We are keeping the charitable deduction, and are working with these organizations to explore fresh ideas to encourage and reward charitable giving.
QUESTION: Are you capping the mortgage deduction at $1 million, as the White House has suggested?
BRADY: We want to reward and encourage home ownership, so we’re looking at different ways to do that. Nothing encourages home ownership like a strong economy.
QUESTION: What lessons have you learned from health care that you will apply to tax reform, and how will you stay on the same page as the Senate?
BRADY: Just about everything is different with these two issues. Americans are united in their desire to change this bloated, outdated tax code. The president is committed to this tax reform approach and has committed to working with the House and Senate on this tax plan. President Trump will be crucial to the success of tax reform—it is a signature issue for the president and for America.
QUESTION: Didn’t the president commit to be on the same schedule as Congress for health care?
BRADY: No.
QUESTION: Can the Senate’s corporate integration tax plan be used to lower the rate?
BRADY: We are encouraging everyone to bring their best ideas to the table, and will continue to explore these ideas.
QUESTION: Do you want this to be revenue neutral or are you okay with an increase in the deficit?
BRADY: I want this to be about as much growth as possible for the longest time possible. That means we must balance the budget over time. So yes, we will be open to losing tax revenues in early years, but we will eliminate bloat and encourage growth.
QUESTION: Conservative groups are calling on you to delay two ACA taxes. What do you think about that?
BRADY: I had hoped the Senate would do its job and eliminate those $1 trillion drag on the economy by passing a repeal. We never anticipated we would have to import those in tax reform. I continue to encourage the Senate to do what it needs to remove those taxes and those mandates
QUESTION: Can you comment on how you will pay for it without BAT? What changes will be made to the IRS? And what will you do with some non-reconciliation goals?
BRADY: 1) We are weighing options. 2) We are proposing a drastically simpler tax code, which will require a drastically simpler and updated IRS that is prepared for the 21st century and focused on customer service. 3) No-comment
