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Nov. 17 — An agreement to reshape business tax laws and pay for infrastructure improvements could quickly come together, Treasury Secretary Jacob J. Lew said.
The framework already exists, he said Nov. 17 at an event at Georgetown University’s McCourt School of Public Policy.
The Treasury Department participated in revenue and budget talks with Congress in late 2014 that could serve as a template for something similar right now, Lew said. The key elements from that discussion could get carried forward, he said, as talks heat up among lawmakers and representatives for President-elect Donald Trump.
He called for a revenue-neutral approach to business tax changes to eliminate pressures that push companies to leave the U.S. to avoid taxes and, in the process, generate one-time revenue from repatriation of overseas profits to build infrastructure.
The 2014 agreement among House, Senate and the administration didn’t reach fruition, but Lew pointed to it as a basis to start from. “We had the pieces queued up two years ago,” Lew said. “If we want to do business tax reform in a fiscally responsible way, it’s there, and it’s something that a bipartisan consensus could be built around.”
Repatriation could generate several hundred billion dollars in revenue, depending on rates, Lew said. Budget proposals from President Barack Obama recommended a 14 percent rate on mandated repatriation.
An economic counselor to Trump, Stephen Moore of the Heritage Foundation, has said Trump’s 10 percent proposal could garner between $100 billion and $150 billion. Moore said repatriation of foreign profits would be optional in Trump’s administration, though a Trump website said it would be required.
Moore has recommended that congressional Republicans include infrastructure spending in a business tax bill to draw Democratic support, particularly on the Senate side, to avoid potential budget and political pitfalls associated with fast-tracking a tax bill through the budget reconciliation process.
A Senate Democratic leadership aide declined to comment on the pitch, since Trump hasn’t put forward a concrete proposal, and House Ways and Means Committee ranking member Sander M. Levin (D-Mich.) also signaled caution.
“One way to promote economic growth in a rather sure way, if it’s done correctly, is through money for infrastructure,” Levin said at event sponsored by the Century Foundation and the Economic Policy Institute. “However, how it’s done is also important.”
He expressed skepticism about any proposals that rely heavily on bond issuance.
Levin also spoke cautiously of elements in the House Republican tax revamp plan, called the blueprint, that Ways and Means Chairman Kevin Brady (R-Texas) is promoting as part of a broader policy agenda championed by House Speaker Paul D. Ryan (R-Wis.).
Parts of the plan, released in June, include a 20 percent corporate tax rate and a 25 percent tax rate for passthrough businesses, as well as a top individual tax rate of 33 percent followed by 25 percent and 12 percent brackets.
“Tax reform and tax issues are real, and the speaker may be pragmatic and we’ve had a cordial relationship, but Paul Ryan is ideological,” Levin said. “And his view is helping to drive where tax reform appears to be going and everybody has an obligation to get involved.”
Most tax benefits in the blueprint accrue to the highest of top earners, Levin said. He also questioned scores that minimize potential revenue losses from the plan amid widening economic disparities in the U.S.
When asked about building bipartisan support in the House for a tax overhaul plan, Brady said he was focused on the foundation of such a package.
“I’m beginning the process, inviting Democrats to engage, bring us their best ideas on how to grow our economy and wages,” Brady told Bloomberg BNA at the Capitol. “Their communities are suffering too.”
But he reiterated that he was now focused mostly on building a tax plan, so discussions on how to get others on board will follow.
With assistance from Allyson Versprille and Kaustuv Basu in Washington.
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