For over 50 years, Bloomberg Tax’s renowned flagship daily news service, Daily Tax Report® has helped leading practitioners and policymakers stay on the cutting edge of taxation and...
A top administration official is leading the charge to craft the president’s tax plan even as House Ways and Means Committee Chairman Kevin Brady (R-Texas) touts the House GOP’s plan on TV and around the country.
President Donald Trump has been talking up a “phenomenal” tax overhaul in recent days, which he plans to release as an outline in the coming weeks. Gary Cohn, an economic adviser to the president and former Goldman Sachs Group Inc. president, is the man entrusted with the job, a White House official said, according to a Bloomberg News report.
The signs are unmistakable. Trump is going to take a stab at tax overhaul. And his outline will likely incorporate parts of the House Republican blueprint for a tax rewrite. But will a provision called border adjustability, which would impose a 20 percent tax on imports, make it to the president’s plan? Big questions remain on how Trump will handle some key issues:
Senate Majority Whip John Cornyn (R-Texas) told reporters last week that he met with Cohn to discuss border adjustability but got “mixed signals.”
The White House is divided on the issue, according to several people familiar with the topic. “My understanding is the White House economic team is divided on support and opposition to border tax adjustment,” one tax lobbyist said.
This is expected to be tricky territory for Trump because Republican lawmakers in the House and Senate and some of the country’s major retailers—such as Wal-Mart Stores Inc. and Target Corp.—are opposed to the import tax. But the “Made in America” theme of the House GOP plan should play well among some in Trump’s inner circle.
Trump has vacillated on the issue, saying that import taxes were too complicated. But he also floated the idea of using an import tax to fund a border wall before a spokesman said it was only one of the options being considered.
The question of where the Trump team stands on full expensing—another key feature of the GOP blueprint—also isn’t clear.
Like anything else, Trump will want to make a big splash when he releases his tax plan. And there is no better space to do so than on Capitol Hill. Trump has been invited to address a joint session of Congress Feb. 28.
“My guess is the roll-out is being timed for the president’s State of the Union address, so perhaps Trump will make this a centerpiece of his speech,” the lobbyist said.
Trump has said that his plan will be introduced in the next two to three weeks.
Trump will probably be less focused than House Speaker Paul D. Ryan (R-Wis.) on creating a plan that is revenue neutral. The White House has already sent signals that it would consider a proposal that added to the deficit, but lawmakers in Congress say that’s a non-starter.
The White House could release an outline that doesn’t include any offsets, leaving the tough decisions to Congress, another tax lobbyist said. The House Ways and Means and Senate Finance committees would have the president’s wish list, but would have to figure out how to pay for it, he said.
“We’re in a post-fact, post-revenue neutrality world,” the second lobbyist said.
The president has occasionally touted a plan to use repatriated corporate profits to finance infrastructure such as roads, bridges and airports. Rep. Bill Shuster (R-Pa.), chairman of the House Transportation and Infrastructure Committee, supports the idea, according to a recent Bloomberg report.
But House GOP leaders have said several times in recent months that this idea is off the table.
It remains to be seen if Trump will be willing to buck House Republican leaders on the issue. But he clearly likes the idea of a big infrastructure package, and this is an idea that will find traction among Senate Democrats, especially Senate Minority Leader Charles E. Schumer (D-N.Y.), who generally favors it.
A repeal of the Foreign Account Tax Compliance Act has yet to play a part in tax overhaul discussions. It doesn’t appear in the House GOP plan and likely won’t get mentioned in Trump’s plan either, because it would be politically difficult for a president who has so far declined to release his tax returns.
However, repealing the law that requires foreign banks to disclose U.S. taxpayer data is a prime candidate for a last-minute add when the reform legislation is close to being enacted, the second lobbyist said.
“If partisan tax reform is on the table, it will be slipped into a conference bill,” he said. “A placeholder, like a change to nonresident alien withholding that is innocuous enough to go unnoticed, will go in first and then you can slip in FATCA repeal at the end.”
To contact the editor responsible for this story: Meg Shreve at email@example.com
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)