Legislators have until Thanksgiving to get tax reform legislation to the president before political pressure and an unforgiving timetable eliminate all hope of passage, House Freedom Caucus Chair Mark Meadows, R-N.C., predicted August 2.
“If we do not have a bill that we’re actually debating in September [that] hopefully gets a vote by October, it will not get to the president’s desk by Thanksgiving,” Meadows said during an Americans for Prosperity discussion on tax reform in Washington. “And if it doesn’t get to the president’s desk by Thanksgiving . . . it isn’t going to happen.”
“Fundamentally, once you go beyond January there’s two things that happen. One is the benefit of those tax reforms don’t get realized for another full year,” Meadows said. Passing tax reform before then would allow taxpayers to see “the benefit of those tax cuts and reforms” in 2018, he added. The second thing is running up against the 2018 midterm elections. “It’s the political reality in those midterm years — everything starts to slow down,” he said.
Meadows also suggested that the House Ways and Means Committee proceed to write tax reform legislation even if budget reconciliation instructions aren’t passed in September. “We opened up the budget gate on the healthcare debate and we did a shell budget, and you see where it got us. We need more specifics in terms of where we are with tax reform. I’m hopeful that we’ll get those over this August recess,” he told reporters following the event.
The congressman also made the case for cutting the corporate tax rate below 20 percent in order to “get the economy going again.”
“You know, some are suggesting a corporate rate of 25, 24 percent. Some go even as low as 20 percent. The president’s at 15 percent. I think that something with a one in front of it — whether it’s 15 or 17 or 18 — that’s where we need to be . . . and when we do that we will see the economy revive again,” Meadows said. He added that it would be hard to support a tax rate that is higher than 19 percent. “What they’re talking about now is anywhere from 21 to 22, up to 27 percent,” which won’t influence businesses to make different economic decisions, he said.
Meadows warned that, even taking reconciliation rules into account, to get the corporate rate into the teens would require offsets.
“The biggest question is what do you do on full and immediate [expensing], because that’s about a $1.7 trillion cost. But assuming that you keep full and immediate [expensing], then what you’d have to do is look at budget windows and see when those tax cuts would expire, whether it’s at the end of a 10-year window or the end of a 15- or 20-year window,” Meadows told reporters after the event, adding that he is open to extending the budget window in order to get a lower rate.
“There’s nothing that would suggest that we have to have a 10-year window, and so I’m willing to look at all creative ideas to make sure that we can be as bold as possible on tax reform,” he said. Meadows said he would be in favor of a 15-year budget window to “allow the taxes to be permanent for up to 15 years,” giving businesses two seven-year planning sessions.
A senior White House official recently told Tax Analysts that an extended budget window for tax reform is infeasible.
Meadows also said budget reconciliation instructions that include language requiring tax reform legislation to be revenue neutral could be a non-starter for him. “When we talk about revenue neutral, what that means is we’re going to cut your taxes in one place and we’re going to add them somewhere else. There’s no benefit from that,” he said, later telling reporters that “we should not let revenue neutral be the constraint for us to be bold.” He added that he is in favor of tax reform being deficit neutral rather than revenue neutral, but that he hasn’t “drawn any lines in the sand.”
“It’s more of a spending problem than a revenue problem, and so let’s make sure that we’re talking about apples to apples,” he said. “If it precludes us from going into the teens with our tax cut, then I’m willing to look at something that would expire in the budget window to allow it to have the greatest economic impact.”
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