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Congressional Republicans and the White House are seeking to negotiate a tax plan GOP lawmakers can vote on as executives say a lack of action could cause problems for businesses.
Republicans agree they would like to overhaul the tax code in 2017, but they don’t agree about how to do it. The White House is pushing to release legislative text this fall, but there is growing concern among the tax community that lawmakers won’t be able to agree on how to raise enough revenue to pay for lower corporate and individual tax rates.
“What we’re trying to avoid is to have a House bill, a Senate bill, and a White House bill,” White House Director of Legislative Affairs Marc Short, told reporters June 5. “I think realistically, our expectation will probably be after Labor Day is when you’ll see it introduced and a markup.”
Jamie Dimon, chairman and chief executive officer of JPMorgan Chase & Co., said June 6 the cost of delaying tax reform could delay capital spending and slow job creation. “The urgency for tax reform cannot be overstated,” he said.
About half of CEOs in a Business Rountable survey said a tax reform delay would stall investment in equipment, Dimon said. The survey also found that 56 percent of companies would delay hiring.
President Donald Trump met with Republican Senate Majority Leader Mitch McConnell (R-Ky.) and House Speaker Paul D. Ryan (R-Wis.), June 6 to discuss a plan. So far, the White House has been reticent to publicly support specific provisions that would raise revenue to pay for the 15 percent corporate and passthrough tax rate in Trump’s plan.
The White House and congressional Republicans have set up regular meetings throughout the summer to come to a consensus on a plan. Treasury Secretary Steven Mnuchin said he will meet with House and Senate leaders weekly.
Mnuchin and National Economic Council Director Gary Cohn also met with representatives from Airlines for America, Association of American Railroads, American Trucking Associations, United Parcel Service Inc., and FedEx Corp. June 6 as part of the White House’s tax reform “listening sessions.”
Other areas of disagreement among Republican lawmakers include the border adjustment tax on imports and whether to eliminate the deduction for net interest expense. Discussions about these provisions will also require the GOP to determine whether the plan will be revenue neutral. A plan that adds to the deficit will likely not be permanent, which would limit the scope of changes in the bill.
Trump has tweeted in recent weeks about tax cuts. The use of “cuts” rather than “reform” has worried lawmakers in the House who want to see changes to the tax code beyond lower rates. The president’s word choice isn’t critical “as long as he is thinking about reform,” Rep. George Holding (R-N.C.) said.
“Tax reform needs to be reform, not just cuts,” Holding said. “You will need to have pay-fors.”
The House is continuing to work on its tax plan, which includes the border adjustment tax. The Senate is still discussing a framework, Finance Committee Chairman Orrin G. Hatch (R-Utah) told reporters. Still, Hatch said he is prepared to hold a markup in the coming months.
“We are ready and I might even want to do it before Labor Day,” Hatch said. “I’d like to do it as soon as possible.”
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