Tax Plan Vision Hazy as Mnuchin, Brady Disagree on Border Tax

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By Laura Davison and Kaustuv Basu

Treasury Secretary Steven Mnuchin made appearances before the two tax-writing committees this week, reiterating the administration’s concerns about the House GOP’s border adjustment tax and raising doubts about whether the idea has enough momentum among Republicans to pass the House.

Mnuchin divulged few details about the White House’s priorities for tax reform during the May 24 and 25 testimonies before the House Ways and Means and Senate Finance committees. Questions will be answered when the House, Senate, and White House come to consensus on a tax plan, he said.

When asked about specific provisions that would be needed to raise revenue to pay for lower rates, such as eliminating like-kind exchanges or deductions for student loans, Mnuchin replied with a stock response that the White House is “looking at everything.”

But everything, thus far, likely doesn’t include the border adjustment tax. Pressure is mounting on House Ways and Means Committee Chairman Kevin Brady (R-Texas) to make a decision on the controversial provision at the center of his tax plan, which would tax imports at 20 percent.

Rep. Dave Brat (R-Va.), a member of the House Freedom Caucus, an ultra-conservative group of about three dozen lawmakers, thinks that there should be a whip count in the House Republican Caucus about where members stand on border adjustability.

Solution Needed ‘Yesterday’

“So we needed to solve that one like yesterday,” Brat said, adding that precious time is being spent on trying to push the border tax. “The border adjustable piece, we got to find a solution to that quick. We can’t be waiting several more weeks and have that piece collapse and then you got a trillion dollar problem on your hands.”

Brat said he spoke about his concern about timing at a conference-wide meeting May 25. Brady told reporters later that day he wasn’t open to such a whip count.

“No, for the same reason we don’t whip any single provision of tax reform. Because at the end of the day, our business and families will be looking at the whole picture,” he said.

Frequently Asked Questions

Unlike at the Ways and Means hearing where border adjustability was a frequently discussed topic, Sen. Dean Heller (R-Nev.) was the only Finance Committee member to mention the BAT. Several Republican senators have dismissed the provision as politically problematic and something that likely won’t get much play outside the House.

Heller asked what other ways the White House could replace the approximately $1 trillion in revenue over a decade that the border adjustment is projected to raise.

“This is all about base broadening,” Mnuchin said. “We are working hard to look at lots of different alternatives as to how to fill that gap. We’re looking at everything, as you know. Nothing is off the table.”

To contact the reporters on this story: Laura Davison in Washington at lDavison@bna.com and Kaustuv Basu in Washington at kbasu@bna.com

To contact the editor responsible for this story: Meg Shreve at mshreve@bna.com

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