Time for a Trump Tax Plan as Timing on Blueprint Shifts
Last week, various high-profile members of the House Ways and Means Committee were about town publicizing the House’s tax reform “Blueprint,” which would overhaul the U.S. corporate, individual, and international tax systems, as well as make significant reforms to the Internal Revenue Service (IRS). Though initial expectations were that the text of the Blueprint might be available as early as March, Chairman Kevin Brady (R-TX) last week indicated that it is his hope to have the legislation released “during the first half of the year,” which likely means the bill will be finalized in June. Relatedly, senior Ways and Means Committee member Vern Buchanan (R-FL) suggested that Congress could nevertheless enact the comprehensive tax reform package by August – though, admittedly, he acknowledged that could slip until the end of the year depending on how the politics all play out.
While Chairman Brady has acknowledged that it is important to wrap the process up sooner than later, the Border Adjustability proposal in the House proposal continues to receive skepticism (if not pushback) from a large array of stakeholders – including from fellow Republican Senators. In fact, last week, following remarks from Senate Finance Committee Chairman Orrin Hatch (R-UT) and senior member Senator John Cornyn (R-TX), Senators David Perdue (R-GA) and Mike Rounds (R-SD) have expressed concern that the proposal helps pick winners and losers. With opposition mounting, the question remains: how do you pay for tax reform if you jettison its biggest payfor (which comes in at over $1.2 trillion)? While alternative options exist, they are also likely to be unpopular (i.e., a recent Republican carbon tax proposal).
Nevertheless, as Republicans continue to debate tax reform in the capital, last week the Trump Administration announced that it plans release an outline of its “phenomenal” tax reform proposal in the next several weeks as part of its budget request. According to White House Press Secretary Sean Spicer, the plan with be comprehensive and bipartisan. At the same time, however, while Republicans prefer to do permanent, bipartisan tax reform, they are still ready to use the reconciliation process if necessary.
Finance Announces Subcommittee Assignments as Ways and Means Gets New Members
Last week, Senate Finance Committee Chairman Hatch and Ranking Member Ron Wyden (D-OR) announced assignments for the Committee’s six Subcommittees, which include:
- Taxation and IRS Oversight;
- Health Care;
- International Trade, Customs and Global Competitiveness;
- Energy, Natural Resources and Infrastructure;
- Social Security, Pensions and Family Policy; and
- Fiscal Responsibility and Economic Growth
A full list of the subcommittees is available here.
Separately, Representative Judy Chu (D-CA) last week was appointed to fill the recently-vacated seat previously occupied by former Representative Xavier Becerra (D-CA); Representative Becerra resigned in December to serve as California’s Attorney General. Additionally, with Representative Tom Price (R-GA) now officially confirmed as Secretary for the Department of Health and Human Services, Republicans are soon expected to fill his vacant seat on the Committee.
Section 385 Regulations Under Fire
On January 31, Representative Todd Rokita (R-IN) introduced H.J. Res. 54, which calls for using the Congressional Review Act (CRA) process to roll-back the Section 385 debt-equity regulations finalized by Treasury during President Obama’s last year in office. While the legislation does not currently have any co-sponsors, House Democrats have come out strongly against the proposal, with senior Ways and Means Committee Member Lloyd Doggett (D-TX) noting that “Treasury took these important steps amidst the refusal of Republicans in Congress to address the wave of corporate ‘inversions’…. [r]epealing this modest Treasury rule would be an invitation for corporations to head abroad.” While there has been some speculation that the President Trump and his Treasury may have Section 385 regulations on their radar, thus far the Administration has not moved forward with any specific attempts to undo the regulations.
This Week’s Hearings:
- On Tuesday, February 14, the House Ways and Means Committee has scheduled an organizational meeting to adopt the Committee’s: (1) oversight plan; (2) views and estimates on the fiscal year 2018 federal budget; (3) Subcommittee assignments; and (4) appointments to the Joint Committee on Taxation (JCT).
Mnuchin Nomination Moves Forward
Despite opposition to his nomination, Treasury Secretary Nominee Steven Mnuchin appears all but certain to be the country’s next Treasury Secretary. With a final vote on his nomination set for today, Mr. Mnuchin will be poised to move forward in his new role and will be sworn in by President Trump shortly after his confirmation is official. Once sworn in, Mr. Mnuchin is expected to begin filling in his Treasury Department leadership, which could include names like Jim Donovan, Justin Muzinich, and David Malpass. Once his team is in place, Mr. Mnuchin will be tasked with, among other things, helping the Administration work with Congress in an effort the shepherd tax reform across the finish line.