With the effort to repeal and replace the Affordable Care Act seemingly stalled, two Trump administration officials said July 31 that they’ll take a different approach on tax reform that includes pushing for an aggressive timeline while engaging grassroots organizations earlier in the process.
The expectation is that the House and Senate will return to regular order to hold hearings and markups on tax reform legislation after Labor Day, followed by House passage in October and Senate passage in November, White House Director of Legislative Affairs Marc Short said at a tax reform panel in Washington hosted jointly by conservative groups Americans for Prosperity and Freedom Partners. That’s an “aggressive schedule,” Short acknowledged, but one that allows enough time to pass a budget reconciliation resolution if lawmakers decide to go that route.
Short said he hopes that much of the legislative text for a tax reform bill will be drafted during the August recess.
He left open the possibility that there may be more than one tax reform bill — one coming from the House Ways and Means Committee and one from the Senate Finance Committee — but added that he didn’t expect there would be much difference between the two.
Short also told reporters that the administration would likely not push for full expensing to be included in the final tax reform legislation.
Short and Treasury Secretary Steven Mnuchin, who also spoke on the panel, said that as legislation is drafted over the coming weeks, one of their top priorities is to get grassroots organizations and business coalitions involved in advancing tax reform at the outset of negotiations, rather than merely seeking their approval on the finished product.
Getting House Republicans to drop the border-adjustable tax from their plans for tax reform — a concession made official in a July 27 joint statement by members of the so-called Big Six — “went a long way” to unifying Republican lawmakers and grassroots groups, Short said.
Americans for Prosperity (AFP) President Tim Phillips also sounded a positive note, saying there is “far more unity right now in the caucus and in the broader conservative movement than there ever was for healthcare.” The joint statement was “good, strong, and bold,” he said, adding that sidelining the border-adjustable tax — which AFP opposed — was needed to reach that point.
Short noted that with healthcare reform, there wasn’t an organized effort to bring grassroots groups on board, but that’s not going to be the case with tax reform. The Trump administration is looking to those organizations to talk to their members and to lawmakers, particularly in the coming weeks while the latter are back in their districts, he said.
Mnuchin said that President Trump will take a more active role in pushing tax reform than he did with healthcare reform. “He’s the greatest negotiator. . . . He’s going to be on the road helping us sell this,” Mnuchin said.
Mnuchin and Short shied away from offering many new details of what tax reform would look like. Short reaffirmed that the White House still wants a 15 percent business tax rate for corporations and passthrough businesses, and he said Republicans are “striving” for revenue neutrality, while declining to commit to that objective. “We are most interested in making sure the economy is growing,” he said.
Other specifics, like how interest deductibility will be treated or what the individual tax bracket income thresholds will be, are details that will be left to the committees to sort through, Short said. However, asked after the event whether the joint statement’s call for “unprecedented” cost recovery implied full expensing, he told reporters, “Probably not.”
Room for Bipartisanship?
Short and Mnuchin predicted that critics on the left might balk at the Republican tax cuts as a giveaway to wealthy taxpayers, but maintained that their goals of a simpler tax code that provides middle-income tax relief should appeal to Democrats.
One Democratic taxwriter blasted the event’s connection to conservative activist billionaires David H. and Charles Koch as evidence that Republicans are being led by “billionaire special interests.” House Ways and Means Committee member Lloyd Doggett, D-Texas, said in a statement that healthcare was the “opening act” when it comes to providing billions of dollars in tax cuts to the Koch brothers, while the Republican tax agenda is the “main event.”
Short lamented the “class warfare rhetoric” and said that the “level of resistance is pretty strong at this point,” but he noted that the administration has held meetings on tax reform with Democrats from the moderate Blue Dog Caucus and the Problem Solvers Caucus. He also said that the White House has spoken with Democratic lawmakers from upper-Midwest states, whose constituents they perceive may be more receptive to Trump’s tax policies.
Short also left open the possibility that Republicans may not use the reconciliation process to advance tax reform, while at the same time arguing that the process isn’t inherently partisan. He said that while he believed many rank-and-file Democratic lawmakers are supportive of efforts to cut taxes on businesses, Democratic leadership “may try to keep their conference locked in place.”
“We’ve learned how difficult it is to thread the needle with 52 Republican votes,” Short said.
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