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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 firstname.lastname@example.org
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