The Trump administration and congressional leaders have been meeting regularly on tax reform over the last several weeks, reportedly with the expectation to release a framework of impending legislation sometime in September (TAXDAY, 2017/09/01, T.2). While some lawmakers are expressing optimism about the overall success of the meetings, it appears unlikely that full consensus has been reached among the “Big Six” and the taxwriting committees (TAXDAY, 2017/09/08, W.1).
President Trump took to Twitter on September 8 to urge Republican lawmakers to step up the pace of tax reform. “Republicans must start the tax reform/tax cut legislation ASAP. Don’t wait until the end of September—needed now more than ever,” Trump said in a tweet, adding “Hurry!” at the end of his call to GOP taxwriters.
Despite the uncertainty hanging over full party consensus, some progress is being made and agreement is being reached, according to House Ways and Means Committee Chair Kevin Brady, R-Tex. Brady told reporters on September 7 that the “Big Six” is “making progress on the important decisions that go into the framework” that is expected to be released in the coming weeks. “From this framework, the Ways and Means Committee will fill in the details, transform this into legislative text, which we’re in the process of right now,” he said.
According to Ronald A. Dabrowski, principal and technical deputy to the principal in charge, Washington National Tax, KPMG LLP, the joint statement on tax reform released in late July by the administration and top congressional leaders (TAXDAY, 2017/07/28, C.2) likely signals some ongoing disagreement or uncertainty among the key players. As to the issue of whether lawmakers will move forward with permanent tax reform or temporary tax cuts, the statement’s chosen words of a “priority on permanence” is “signaling a tension in the system about how things are going to get paid for,” Dabrowski said in a September 7 KPMG webinar.
Under Senate budget reconciliation rules, which Republicans intend to use to move forward on tax reform, legislation cannot add to the deficit beyond a 10-year budget period. Thus, it is critical that the legislation introduced find ways to offset expected tax cuts to accomplish comprehensive, revenue-neutral tax reform. How to achieve that important element within the tax reform package is likely now under debate. Moving legislation through reconciliation needs only a simple majority in the event that there is no Democratic support. Whether Republicans will struggle to gain intraparty support on tax reform, however, as they did on health care (TAXDAY, 2017/08/01, C.1), remains to be seen.
Freedom Caucus Seeks Details
The conservative Freedom Caucus has been urging the “Big Six” to share the details of the tax reform plan with members or to otherwise expect members to release a tax reform plan of their own.” I’m not threatening my own tax bill if we don’t get our way,” Freedom Caucus Chair Mark Meadows, R-N.C., said on September 8. “At the same time, if we don’t make decisions in the near term on what we’re going to do, we might put forth something,” he added.
According to Meadows, other members outside of the “Big Six” need to be involved in the process. “To allow the Big Six or Secret Six to negotiate something, then give everyone a binary choice, is not something that will necessary represent a broad swath of the GOP conference.”
SFC Hearing Scheduled
In related news, the Senate Finance Committee (SFC) has scheduled a tax reform hearing for September 14 to examine how best to streamline the individual tax system. “Clearly, the code is broken and that’s why Congress and the administration are working to create a tax system for individuals that is simpler, fairer and will deliver much-needed relief to middle-class families,” SFC Chair Orrin G. Hatch, R-Utah, said in a press release announcing the hearing.
By Jessica Jean, Wolters Kluwer News Staff