Tax reform will “slash the corporate tax rate to level the playing field” for businesses that face international competition, House Speaker Paul D. Ryan, R-Wis., said July 20 as he took his pitch on the road.
“We’ve got to get these tax rates down,” Ryan told New Balance employees at the athletic apparel company’s plant in Lawrence, Massachusetts. He added, “We’re going to create a new lower tax rate specifically for manufacturers, for small businesses, for companies like this, for businesses across America, so they can actually compete.” He said a 20 percent corporate rate was “very realistic” and that cutting the corporate tax rate would help “bring good paying jobs back from overseas.”
Ryan’s comments at the plant came as lawmakers on the House Budget Committee in Washington put the finishing touches on a fiscal 2018 budget resolution that Republicans can use to start the process of implementing comprehensive tax reform. House Ways and Means Committee Chair Kevin Brady, R-Texas, echoed Ryan’s remarks July 20, telling reporters that House Republicans want business tax rates at 20 percent or lower to spur job creation.
Regarding the White House’s proposal for a 15 percent corporate tax rate, Brady did not rule it out as a possibility but said no final decision has been made on what the rates will be. “We’re focused on driving rates for mom and pop [businesses] and large corporations as low as we can,” he said.
House Republicans want to turn their 2016 tax reform blueprint into legislation this fall — the budget resolution sets an October 6 deadline — but Brady said he wants an agreement with the Trump administration and Senate Republicans first.
Like Brady, Ryan reiterated that tax reform will be accomplished before the end of the year. “We’re going to get this done in 2017. We’re going to get this done because we have to get this done,” he said.
Ryan also said that the legislative text for the tax reform bill will be written by the House Ways and Means Committee and the Senate Finance Committee.
The so-called Big Six — Ryan; Brady; Senate Majority Leader Mitch McConnell, R-Ky.; Senate Finance Committee Chair Orrin G. Hatch, R-Utah; Treasury Secretary Steven Mnuchin; and National Economic Council Chair Gary Cohn — are the main negotiators and all have common goals for tax reform, Ryan said.
Ryan also touted planned changes to the individual tax rate. “Right now, we’ve got a tax rate that basically no one truly understands, enforced by an agency that no one really likes — the Internal Revenue Service,” he said. He then repeated his promise to ease the way Americans pay their taxes.
“First and foremost, we’re going to cut your taxes,” Ryan said. He added that “harmful and burdensome taxes” like the estate tax need to be eliminated and that “we need to consolidate these deductions and we need to double the standard deduction” in order to simplify taxpaying.
Ryan said they have found consensus on cutting the corporate tax rate, addressing expensing, consolidating and simplifying the individual tax rates, increasing the standard deduction, and preserving “priorities like charities, retirement savings, [and] buying a home.”
The Deficit Increase Option
Tax reform also came up at a White House briefing July 20, with a top official saying that the administration wants to keep a possible deficit-increasing tax cut as an option in tax reform talks. This does not jibe with the House Budget Committee’s budget resolution, which calls for revenue-neutral tax reform.
Office of Management and Budget Director Mick Mulvaney acknowledged at a July 20 White House briefing that the Trump administration will be “a little disappointed” if some of the Affordable Care Act’s taxes aren’t repealed as part of healthcare reform. But he quickly added that they’ll “get another bite of that apple on tax reform.”
Mulvaney responded to a question about whether doing so would make it harder to achieve revenue-neutral tax reform by dismissing the need for revenue-neutral tax reform in the first place. “I believe that we should take on short-term increases in deficits if it’s what it takes to get to an increase in our long-term sustained growth,” he said. Such a belief, Mulvaney said, was something he learned from Ryan.
Mulvaney added that he thought Ryan could be persuaded to accept a budget that increases the deficit. “I think I can make the case to him that while I appreciate and understand his position on deficit neutrality, when it comes to the tax reform, I think that growth needs to be paramount in that and that we’re willing to take on short-term deficit increases,” Mulvaney said.
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