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Feb. 25 — Opening a door of sorts, House Ways and Means Committee Chairman Kevin Brady (R-Texas) signaled his willingness to use revenue from international tax changes for something more than cutting tax rates.
Brady wants to shift U.S. taxes on multinational companies' foreign profits to more of a territorial or dividend exemption system, and he wants to do it sooner rather than later. The change would yield a one-time revenue boost, which Brady said he would prefer to apply to rate cuts, though he offered to consider pitches from the Democratic side of the aisle.
“I know if this is to be bipartisan, other members have different ideas on where that should go; let's have that discussion,” Brady said at a Tax Policy Center event on Feb. 25.
He considers reaching policy agreement on territorial taxation the most important part of the equation. Brady said lawmakers can deal with revenue concerns later.
“I think we ought to focus on how do we get the policy right for bringing those dollars home and let companies deploy their capital” where it most allows them to grow, he said. “I think we get that policy right, we can have the discussion of where that revenue goes.”
When asked how he would consider funding infrastructure and education, Brady also expressed interest in dynamically scoring spending proposals Democrats might offer.
“I'm one of those that believes that if those changes are big enough, we ought to do dynamic scoring in those areas as well,” Brady said. “I don't have any problem with weighing what the impacts of these investments are rather than some of the estimates we get.”
Brady previously made a case for taking into account economic benefits from wholesale changes to the U.S. tax code as a way to ensure revenue neutrality, rehashing a point he has already made publicly (30 DTR G-4, 2/16/16).
But he dismissed the idea of a deal on taxes and entitlement programs.
“I am not a fan of the grand bargain approach,” Brady said.
Brady and others on his committee have admitted that their efforts on international taxes might not advance beyond a markup in 2016, but they continue to lay the groundwork.
The chairman of the Ways and Means tax policy subcommittee, Rep. Charles Boustany Jr. (R-La.), has said he hopes to introduce legislation by the end of March to switch to more territorial taxation on foreign profits, reduce taxes on intellectual property and maybe cut the U.S. statutory corporate tax rate.
“We cannot sit back and wait for circumstances to be ideal to move forward, so we are going to move forward,” Boustany said. “My goal as chairman of that subcommittee is to write a bill on international, have it ready, and then talk to the speaker and see how far we can go with this” (36 DTR G-8, 2/24/16).
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