Tax Reform Outline Coming in Two Weeks, Before Budget Vote

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By Colleen Murphy

House Republicans will release a tax reform framework the week of Sept. 25, a step forward after months of stops and starts.

Those details will be a crucial negotiating chip as the conference moves to pass a fiscal year 2018 budget resolution—which is the vehicle for a filibuster-proof tax bill—in early October, something it doesn’t currently have the votes to pass. Since returning this month, the House Ways and Means Committee has faced mounting pressure to release a tax plan, but lawmakers have been mum on which specifics, such as tax rates, will be included in the forthcoming document.

Though the release hints at progress, two major hurdles remain: the reluctance of the House Freedom Caucus and insufficient Republican support in the Senate. Republicans need 51 votes for their plan to pass in the Senate, a threshold House members said Sept. 13 they couldn’t meet. Republicans in the House are especially frustrated with the Senate after the chamber balked on the Affordable Care Act repeal in July.

“There’s a lot of frustration” with the Senate, Rep. Mike Bishop (R-Mich.), a Ways and Means member, told reporters. “It’s bubbling. We’re really tired of it,” he said.

Moving Ahead

Ways and Means Committee Chairman Kevin Brady (R-Texas) spoke Sept. 13 to the conference, and signaled Republicans are pursuing accelerated expensing of capital investments but not full expensing, House Freedom Caucus Chairman Mark Meadows (R-N.C.) told reporters after the meeting.

“They are talking about passthrough rates in the 25 percent range,” Meadows said. With the corporate tax rate, the goal is to get to 20 percent, he said. The proposals aren’t new but it is significant he presented them to the group, which has been pushing for more information about the plan.

Ways and Means Republicans will meet Sept. 24-25 to approve the final details of a tax plan. Once the budget resolution—which will include tax reform instructions—is passed, the committee will introduce a chairman’s tax mark and mark up a bill through regular order before working with the House Budget Committee to bring tax reform to a floor vote, Brady told reporters Sept. 13.

“We will release a consensus document with the core elements of the big bold tax reform the week we return, Sept. 25,” Brady said, for the first time giving a specific date range. “Our time table is still delivering this to the president’s desk this year.”

Freedom Caucus Agitating

Because of tight margins in the House, the several dozen members of the House Freedom Caucus hold significant weight. Its clout was visible earlier this year, when members became central to negotiations over repealing the ACA.

Meadows said he wants the framework to answer questions about the corporate and passthrough tax rates, the repatriation rate, and the capital gains rate, Meadows said he also wants more details on individual tax brackets and how expensing and a territorial tax system would be handled.

“To not be able to answer any of those six questions today means we don’t have a tax plan,” Meadows said Sept. 12.

Rep. Dave Brat (R-Va.) said he needs to know corporate, individual, and passthrough rates, but doesn’t care about other details—like if the plan will add to the deficit. He was also unhappy that the plan is still days away.

“We need it like now, ASAP. They’ve been promising that to us for like four or five months, ‘we’re going to get you the bullet points, we’re going to get you the details,’ and we’re not talking details,” he told reporters Sept. 13.

Budget Linchpin

The budget is likely to be taken up after the tax framework comes out, Budget Committee Chairman Diane Black (R-Tenn.) told reporters Sept. 13. Black has been working to generate support for the budget resolution, which would tie tax reform to about $200 billion in spending cuts.

“Some people want to know more details about the tax reform and that will help to answer their questions,” she said. “I think that may help to give people more confidence to support the budget.”

It’s incumbent upon the majority to move the bill and if the GOP doesn’t avail itself of the filibuster-proof process, “shame on us,” House Speaker Paul D. Ryan (R-Wis.) said Sept. 13 in an Associated Press Newsmakers interview.

He added that the he believes some House Democrats will vote for the bill, even though there aren’t many centrist Democrats left in Congress.

‘Putting It Together’

Brady and members of Ways and Means made clear they are still negotiating on details.

The Joint Committee on Taxation has already scored elements, “because we’ve been doing this for a decade,” Rep. Devin Nunes (R-Calif.), a committee member, told Bloomberg BNA Sept. 13.

“So it’s all about putting it together and then deciding, because there is only so much to go around, and then trying to make sure it’s fair. We don’t want to give anybody some tax windfall or tax increase because of something that we miss,” he said.

Sen. Ted Cruz (R-Texas) is pushing his own tax ideas as the House prepares to make final decisions about what to include in the bill. Cruz said the bill should include full expensing for business investments, an idea that was included in the House GOP tax blueprint but that lawmakers have since de-emphasized.

The budget window should also be expanded to 20 or 30 years from 10, so that Republicans won’t be constrained by revenue neutrality, he said at a Tax Foundation event Sept. 13. “It if expires 30 years from now, it may not be permanent but it is pretty darn close,” Cruz said.

With assistance from Laura Davison and Kaustuv Basu in Washington.

To contact the reporter on this story: Colleen Murphy in Washington at cmurphy@bna.com

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

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

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