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Brady Pushes Border Tax Plan as Democrats Seek Trump Tax Returns

Posted on April 6, 2017 by Stephen K. Cooper

House Ways and Means Committee Chair Kevin Brady, R-Texas, plans to meet with the panel’s Democrats to discuss GOP plans for comprehensive tax reform, including the controversial border-adjustable tax proposal, which he said would benefit from a phase-in period.

Brady outlined his reasoning April 3, telling reporters that a transition period would allow the economy to adjust and allow the observation of changes to currency and exchange rates. “You make sure that there aren’t impacts on retail prices or on the tax rates” for the import industries, he said. “Those are, I think, the very strong benefits for having a very deliberate phase-in period on border adjustability.”

Competing industry groups have met with lawmakers on the border-adjustable tax proposal, but few details of the proposal have been released as committee tax staff work to translate the GOP’s comprehensive tax reform blueprint into legislation.

Despite Brady’s optimism, the border-adjustable tax plan does not seem to be gaining strength in the Senate.

“If the Senate is going to move ahead on a tax bill, I don’t think anybody’s getting in the weeds about border adjustment over here,” said Senate Finance Committee member Chuck Grassley, R-Iowa., who acknowledged that his opinion was based on information from the Iowa Farm Bureau rather than his own economic study. Grassley cited the impact of a 20 percent tax on the price of imported chemicals used by farmers as well as the cost of imported oil.

“If the Senate starts working on a tax bill of its own, you aren’t going to hear anything about border adjustment in the Senate Finance Committee, so ain’t no other question significant,” Grassley concluded. So far no member meetings are planned, but bipartisan committee tax staffers are scheduled to have a so-called rump session on tax reform.

Asked for a positive comment about border taxes, Sen. Jeff Flake, R-Ariz., replied, “It didn’t start in the Senate.”

Finance Committee Chair Orrin G. Hatch, R-Utah, said he’s heard from some who believe a border-adjustable tax is where lawmakers should focus, but “the question is how much and what form it’s going to be.”

Ways and Means Committee Democrats, who expect to talk with Brady April 5, had planned meeting him the week of March 30, but postponed that meeting as the tax panel and the full House debated Democratic resolutions to allow Congress access to President Trump’s federal tax returns.

Rep. Hakeem S. Jeffries, D-N.Y., offered a privileged resolution on Trump's tax returns on April 3, continuing the plan of House Democratic leadership to offer floor resolutions each week Congress is in session. Jeffries told Tax Analysts that the House will likely vote on his resolution by April 5. “What does Donald Trump have to hide and why are the Republicans in the House of Representatives facilitating his effort to shield his taxes from the American people?” Jeffries asked, adding that Trump’s returns will reveal any ties to Russia and how the president will be positively affected by comprehensive tax reform.

Previous Democratic resolutions were offered by Ways and Means member Bill Pascrell Jr., D-N.J., and Reps. Zoe Lofgren, D-Calif., and Anna G. Eshoo, D-Calif.

The committee voted 24 to 16 to unfavorably report Pascrell’s resolution (H. Res. 186), which would have directed Treasury to provide to the House Trump's returns for tax years 2006 through 2015. The committee action effectively stopped any chance the motion would receive a floor vote without Brady's consent.

Follow Stephen K. Cooper (@ScoopOnTaxes) on Twitter for real-time updates.