President Trump's decision to phase out the Deferred Action for Childhood Arrivals (DACA) policy certainly complicates the politics of tax reform, but even a full-fledged immigration reform debate would not necessarily disrupt efforts to overhaul the tax code, close observers told Tax Analysts.
On September 5 Trump announced that the Obama-era immigration program would end after a six-month grace period, during which he challenged Congress to pass immigration reform that would preserve the program and satisfy his priorities in that area.
After meeting with Trump and other GOP leaders to discuss tax reform, House Ways and Means Committee Chair Kevin Brady, R-Texas, told reporters that the timeline for completing tax reform in 2017 had not changed, contending that Congress could turn to immigration policy next year. A recently retired committee member gave a similar assessment.
“I don’t think a push for DACA legislation over the next six months will have an appreciable impact [on] the progress of tax reform,” said former House taxwriter Jim Gerlach, now head of the Business-Industry Political Action Committee.
“If anything, DACA may affect congressional decisions on a short-term or long-term continuing budget resolution since” it may be easily connected to appropriations decisions on other immigration issues such as border wall funding, Gerlach said.
One skeptical tax lobbyist was more blunt, saying in an email: “I don't think DACA impacts tax.” However, other observers told Tax Analysts there might be some impact, albeit minor.
“Adding DACA and immigration reform to Congress’s must-do list this fall has the potential [for] taking away attention from tax reform,” said Jorge E. Castro, a former congressional tax counsel and senior IRS official. He added that while there is limited legislative floor time available, “Congress is certainly capable of advancing two legislative priorities in the coming months, especially since both pieces of legislation would be advanced by different committees of jurisdiction.”
But Castro, now a private tax consultant, conceded, “Congressional leadership and the White House will have the hard task of triaging legislation this fall and determining which ones are the most politically viable and advantageous.”
That decision process may be complicated by political backlash ranging from progressive grass-roots activists to West Coast tech giants. Microsoft President and Chief Legal Officer Brad Smith told National Public Radio September 5 that his company would lobby Congress to act on DACA before tax reform.
Apple Chief Executive Officer Tim Cook also promised to lobby Congress on immigration reform in an email to employees obtained by Business Insider. Cook did not mention tax reform, but did join Smith in pledging that his company would legally resist any efforts to deport its employees previously protected by DACA.
The U.S. Chamber of Commerce also criticized Trump’s decision in a statement September 5, asking “that the administration and the Congress work together to quickly find a legislative solution before the program expires.” But whether or how that stance affects the group’s support for tax reform is unclear. Attempts to obtain comment from the chamber were unsuccessful.
Dustin Stamper of Grant Thornton LLP contended that major corporate interests are unlikely to consciously disrupt one of their legislative goals in the name of another. Businesses are never going to agree completely with any president and “don’t usually bite off their nose to spite their face,” he said. “If tax reform is seen as beneficial to businesses, I think they’ll support it regardless of whether they’re fighting Republicans on other issues.”
Stamper also concurred with Castro that tax and immigration reform are not mutually exclusive, falling under the jurisdictions of separate congressional committees.
“I think the big companies that really move the needle on the Hill are capable of juggling more than one priority at a time,” Stamper said. “That also goes for the influential trade groups that represent smaller business interests.”
Stamper emphasized that companies face “a historic opportunity for tax reform,” the best in two decades, even if success is not assured. He added that tax reformers still have to answer some big questions: “Can they get over budget and procedural hurdles? Will they do real sweeping reform or settle for temporary provisions and a narrower package?”
“Even though we don’t know how it all ends, companies should be taking this seriously already,” Stamper concluded. “There are tons of tax planning opportunities that only work if done before reform is effective. We’re already seeing smart companies take preemptive action.”
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