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Brady Intends to Continue Pushing Border-Adjustable Tax

Posted on April 26, 2017 by Asha Glover, David van den Berg

House Ways and Means Committee Chair Kevin Brady, R-Texas, will continue to push for his proposed border-adjustable tax regardless of whether it is included in President Trump's imminent tax plan.

The border-adjustable tax, an element of the destination-based cash flow tax proposal in House Republicans’ “A Better Way” tax reform blueprint, has been the focal point of debate surrounding the House tax reform plan. While it has drawn vocal supporters and detractors, the Trump administration has been lukewarm to the idea and is reportedly not planning to include it in its tax reform plan expected to be announced April 26.

Still, Brady told reporters April 25 that he’s not giving up on the proposal and that he will continue to make the case that “with changes, modifications and transitional rules,” the issues that have been raised with the proposal since it was first introduced can be addressed and lead to “a good solution.”

The tax rates the White House ultimately proposes, and the ones included in the blueprint, are “very bold” and present “challenges” in trying to achieve revenue neutrality, Brady said. The House Republican blueprint proposes a 20 percent corporate tax rate and a 25 percent tax rate for passthrough businesses, and the border-adjustable tax has been estimated to raise more than $1 trillion over 10 years.

Ways and Means member Vern Buchanan, R-Fla., also suggested that if Trump fails to include the border-adjustable tax in his own plan, it might not harm the committee’s ability to continue proposing it. “It’s a negotiation, and we’ll see what happens,” he said.

Asked how he would sell the tax now, Buchanan said, “I’m just kind of taking a look at it myself.”  

The argument for it is that it “levels the playing field,” he said. “If someone’s charging us 18 percent in a VAT tax, why don’t we charge them 18?” he said.

While House taxwriters don’t seem fazed by the lack of endorsement from Trump, Senate Finance Committee member Tim Scott, R-S.C., suggested that controversy surrounding the border-adjustable tax is one of the reasons the Senate has largely taken a wait-and-see approach to tax reform. “What we saw with the House plan was [that] very quickly once the president made a few comments, several months of hard work went down the drain, from my perspective, on the border adjustability tax,” he said. “So we have decided to wait until afterwards, after we understand and appreciate more significantly where the president is on this topic.”

Hearings Still Planned

Brady reiterated that his committee will begin to schedule hearings on the tax reform blueprint soon. “We are going to do congressional hearings on the blueprint, tackle a number of the big and key issues,” he said. “We’re still working on the timing of them and the witness lists, just all the preparation that goes into place there. You’ll see some announcements I think in a pretty timely manner.”

Ways and Means member Kristi L. Noem, R-S.D., said the hearings might not be scheduled for another two weeks. She said the committee was having difficulties scheduling witnesses to testify because this is a busy time of year for the business community. 

Republican committee members also plan to hold a retreat this coming weekend in Washington, hoping to answer questions on their comprehensive tax reform plan, according to members and staffers. 

Stephen K. Cooper and Dylan F. Moroses contributed to this article.

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