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Dec. 9 — Senate Finance Committee Chairman Orrin G. Hatch (R-Utah) isn’t killing off his corporate integration plan, but said his focus will shift to plans to comprehensively overhaul the tax code.
“I remain very interested in the concept of corporate integration and continue to believe that it would have a positive impact on our tax system and our economy overall,” Hatch said in a Dec. 9 speech on the Senate floor. “But, let’s be honest, Mr. President, after this election, the ground has shifted, and, while we don’t know how everything will play out in the coming months, it’s safe to assume that the tax reform discussion is shifting as well.”
Hatch has not yet released his plan to provide a dividends-paid deduction to corporations, but said the proposal received positive feedback from the Joint Committee on Taxation. Hatch’s comments indicate he will likely hold off on releasing plan details while the Finance Committee works within the framework proposed by House Ways and Means Republicans. Ways and Means Chairman Kevin Brady (R-Texas) has said he hopes to push big tax legislation in 2017.
Amid all the tax revamp noise in the House, Senate Finance Committee member Benjamin L. Cardin (D-Md.) has reintroduced a consumption tax measure he has pushed for years.
The bill (S. 3529), which has been refined since its introduction in 2014, would generate revenue by taxing the purchase of goods and services.
“The Progressive Consumption Tax Act puts this country on a competitive playing field with other nations by providing for a broad-based progressive consumption tax, or PCT, at a rate of 10 percent,” Cardin said in a Dec. 9 statement.
The bill would lower the corporate tax rate to 17 percent.
Four tax benefits remain untouched in the bill—the charitable contribution deduction, the state and local tax deduction, health and retirement benefits and the mortgage interest deduction.
Cardin’s office said in a statement that the bill was reintroduced now “to show what responsible legislation that moves towards a consumption-base could look like as tax reform discussions move forward in 2017.”
Don’t bank on sustained economic growth of 4 percent, analysts at the Committee for a Responsible Federal Budget said.
Demographics work against the goal, touted by President-elect Donald Trump, the analysts said in a blog post on the group’s website. More baby boomers are beginning to retire and average labor force growth of 0.5 percent per year is expected, about a percentage point below historical averages.
Trump’s tax ideas to boost capital stocks would improve growth, but the resulting increase in federal debt would nullify any expansion, the post said. And increased immigration, which could also improve growth, isn’t expected under Trump.
“With a much slower growing labor force, achieving sustained 3.5 percent annual growth would require increasing projected productivity growth by nearly 150 percent, from 1.1 percent to about 2.6 percent per year,” the analysts said. “This level of productivity growth has not been sustained over any decade in modern history.”
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