The Path to Tax Reform: Without a Blueprint, Where Are We Headed?


Still, there remain many obstacles that could derail their quest for tax reform.

Marc Short, the White House's top liaison to Capitol Hill, said Thursday that Republicans have been reaching out to many Democrats on tax reform but are prepared to go it alone if necessary. However, since its release, numerous House Republicans' proposals - the border adjustable tax (BAT), in particular - received pushback from a variety of industries and ultimately forced tax-writers to reassess their approach to tax reform. Ryan and Rep. Kevin Brady, R-Texas, the Ways and Means Committee chairman, have both pushed for full expensing and have emphasized the importance of making the corporate tax provisions permanent.

For their part, House Republicans plan a retreat away from the Capitol next week to discuss a tax overhaul that congressional leaders have been working on for month, the Associated Press reported.

The Big Six have spent the last month and a half continuing to seek agreement and hash out key policy details. That could undermine home-buying and donations to philanthropies, they say. Orrin G. Hatch, Utah Republican and chairman of the tax-writing Senate Finance Committee, told Bloomberg News.

While we do not expect any additional hearings in the House, Members are continuing the work behind the scenes this month by holding "listening sessions" to discuss individual, business and global tax policy issues.

Based on recent discussions, the Republican Party will probably aim for a rate in the range of 20 to 24 per cent, said Mr Ryan Ellis, a Republican tax lobbyist who previously worked as chief tax policy director for Mr Grover Norquist's Americans for Tax Reform. And tax reform is also the one legislative victory that looks increasingly likely.

"There will not be a tax cut, there will not be a reform, there will not be a bill", he told Fox Business Network's Neil Cavuto.

Republican leaders have promised to release the outlines of their plans next week, paving the way for the tax committees in the House and Senate to begin hashing out details and for the budget committees to pass a 2018 spending plan that would unlock fast-track procedures, known as reconciliation, that they could use to avoid a filibuster.

It's unclear how detailed the framework will be - or whether it will represent the unified approach that the president and GOP leaders have sought.

It is clear that there is a palpable desire - indeed, a political imperative - for enacting tax reform in 2017.

First and foremost is the need for a budget. A rate cut on corporate profits could also be used to benefit shareholders and to offer up more executive bonuses, however.

Republicans are hopeful they can pass matching budget resolutions sometime in October and try to pass similar tax cut plans in the House and Senate after that.

Two members of the Senate Budget Committee, Republicans Pat Toomey and Bob Corker, announced the formal agreement late on Tuesday, but their joint news release did not provide dollar figures for revenue reduction or tax cuts, Reuters reported.

The plan could deepen the deficit in the short run, but the two budget writers hope it improves finances over time.

The law requires Congress to evaluate the budgetary effects of all new legislation at the end of each year (see the 2016 version here). There may be a looming fight over the budget, but they must not let any petty disagreements get in the way of moving forward of this vital overhaul of the tax code.

Finally, the inter- and intra-party politics also have the potential to play a key role in determining the success of tax reform efforts. But Republicans have made little tangible progress toward that ambitious goal so far. Tax reform represents an opportunity for Republicans in Congress to improve communities across the country with a single piece of legislation and they can not allow it to pass. Second, to demonstrate that President Trump and the Republicans in Congress can "get things done".

Trump campaigned previous year on a promise of comprehensive tax reform. That was the case with the Bush-era tax cuts, which were set to expire in 2010 and created the "fiscal cliff" in 2012. As the debate continues, now is a critical time for all those with an interest in tax reform to be actively engaged with tax-writers.