Lawmakers on Capitol Hill, tax practitioners and stakeholders continued to weigh-in on the Republican tax reform framework the day after its release on September 27. The House Ways and Means and Senate Finance Committees are tasked with writing tax reform legislation in line with the framework.
Ways and Means Chairman Kevin Brady, R-Tex., one of the “Big Six” behind the framework’s release, said on September 28 at the U.S. Chamber of Commerce that he is confident tax reform legislation will reach President Trump’s desk in 2017. Likewise, Big Six participant National Economic Council Director Gary Cohn said in a September 28 press briefing that the White House hopes legislation will move through the House in October and on to the Senate in November to allow for enactment this year.
Already, a number of businesses, such as Best Buy, Walmart and Target, have released statements in support of the framework. However, despite the momentum, Congress must first pass a budget resolution as the vehicle on which tax reform legislation will ride.
“Where we turn now is passing the budget which provides a runway to land tax reform on,” Brady said. To that end, House Budget Committee Chair Diane Black, R-Tenn., said on September 28 that Republicans had enough votes in the House to pass a fiscal year 2018 budget. The budget is needed for passing tax reform legislation under the reconciliation process because it requires only a simple majority in the Senate. Reportedly, the House is expected to vote on the budget on October 5, according to Black.
Sen. Pat Toomey, R-Pa., a member of the Senate Budget Committee, told reporters on September 27 that he anticipates the mark up of a budget in committee during the week of October 2, allowing it to reach the floor during the week of October 9. It is likely that the House and Senate will go to conference on two budget resolutions, thus requiring another vote before formally moving on to tax reform.
Under the Senate’s reconciliation rules, any forthcoming, permanent tax reform legislation cannot increase the deficit beyond a 10-year budget window. Moreover, while the framework provided targeted details about lowering tax rates, it did not discuss how cuts will be paid for. This is why PwC’s tax leaders, Pam Olson, former Treasury assistant secretary for tax policy, and Rohit Kumar, former deputy chief of staff for Senate Majority Leader Mitch McConnell, R-Ky., are warning businesses against changing tax strategy just yet.
“There needs to be more details on how Congress will cover the costs associated with the tax relief proposed in the framework,” Olson and Kumar wrote on September 28. “No one can or should be confident these targets will hold until legislative language is revealed and the first waves from the proverbial swamp crash upon the congressional shores.”
Many Democrats remain outspoken about their concerns that the framework would benefit the wealthy more than the middle class. Senate Minority Leader Charles E. Schumer, D-N.Y., put forth a series of tweets criticizing the GOP proposal, expressing doubt that the plan would help the middle class at all.
“When you cut taxes on the top 1 percent and raise them for the lowest-income Americans, that’s not pro-American,” Schumer said. “POTUS said his tax plan would create a middle-class miracle. I think it would a miracle if it helped the middle class,” he added.
House Minority Leader Nancy Pelosi, D-Calif., has criticized the Trump/GOP tax framework for providing tax cuts to the richest Americans while forcing “families to foot the bill…. Trickle-down economics have always increased the deficit. And Republicans keep pushing it,” she said on September 28.
House Speaker Paul Ryan, R-Wis., however, said the GOP tax reform plan is focused on the middle-class. “This is about delivering middle class taxpayers tax relief. It’s about letting those hardworking taxpayers keep more of their own money and giving them a tax break,” Ryan said.
By Jessica Jeane, Wolters Kluwer News Staff