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White House, Brady Send Mixed Signals on Tax Reform Efforts

Posted on March 29, 2017 by Jonathan CurryStephen K. Cooper

Republicans may want to move on to comprehensive tax reform after their failed healthcare reform effort, but recent comments from the House's top taxwriter appear to conflict with views from the Trump administration over who will lead the initiative.

House Ways and Means Committee Chair Kevin Brady, R-Texas, emphasized on March 26 that the House Republicans' "A Better Way" blueprint was in the best position to serve as the basis for the party's tax reform efforts. "It wouldn't make sense to have a separate bill from [Treasury] Secretary [Steven] Mnuchin, a separate one from [National Economic Council Director] Gary Cohn, a third from whomever," Brady said during an interview on Fox Business Network's Sunday Morning Futures.

Meanwhile, White House press secretary Sean Spicer, responding to a question the following day about tax reform, said that while the White House would work with Congress, "we're driving the train on this." Mnuchin, Cohn, and the White House legislative affairs team would all have a major role in that effort, Spicer told reporters.

When asked about Spicer's comments, Brady said at a March 27 press briefing that roughly 90 percent of the House GOP's pro-growth tax reform blueprint aligns with the Trump administration, and he added that his committee would take action this spring. White House officials have repeatedly indicated that the administration is preparing its own plan for tax reform. 

Brady rejected the idea that Republican divisions will result in passage of tax cuts that drive up the federal budget deficit. Moreover, he said the GOP blueprint never envisioned eliminating the tax provisions of the Affordable Care Act, nor would he agree to use tax reform to repeal the medical device tax or the so-called Cadillac tax on high-cost plans.

Brady said that although Republicans are committed to using the budget reconciliation process to sidestep objections from Senate Democrats, he would love to have "good ideas" from the minority party included in reform. Brady plans to meet with Ways and Means Democrats on March 29, according to Democratic aides, who suggested that the meeting would be more of an explanatory session rather than a negotiation over specific tax policy.

And while at least one GOP lawmaker said he expects tax reform will be easier than healthcare reform, Republicans face a stark choice over how to proceed.

"Tax reform is not as emotional, it's not as divisive, and I think this could be one where we'll come together quicker," Rep. Chris Collins, R-N.Y., said March 27.

Collins said he was concerned that tax reform could end up being temporary legislation lasting 10 years rather than permanent law like those passed in 2003, but added that "that's better than doing nothing." He said, "I want to make them permanent, but if my choice became 10-year temporary or nothing, I'll take 10-year temporary. But our folks need to understand the ramifications of 10-year temporary."

Collins acknowledged that leaving the ACA taxes in place would change the fiscal impact of tax reform. "We can't now eliminate $800 billion of Obamacare taxes, fees, and penalties and do $1 trillion of fundamental tax reform. We can't do both of those," Collins said. He added that it would be difficult for tax reform to be revenue neutral.

Unresolved Issues

As the pivot to tax reform began, it appeared the White House and top Republican leaders still needed to make decisions on other key questions.

Brady maintained during his March 26 interview that tax reform should be pro-growth but also be fiscally responsible and ultimately help reduce the national debt, while Spicer said March 27 that their plan would focus more on what attracts jobs and grows the economy. Spicer also said that it was too early to say whether the White House plan would add to the deficit. On repealing the ACA taxes as part of tax reform, Brady said those would "stay in place as long as Obamacare is in place"; Spicer claimed it was too early to comment on whether the healthcare taxes would be eliminated.

The status of the House Republicans' border-adjustable tax in the coming Republican tax reform plan remains unclear, though Brady showed no sign of surrendering it.

Beyond serving as a revenue raiser to help offset business and personal tax rate cuts, the border-adjustable tax eliminates any tax incentive for companies to move overseas, Brady said. Without it, tax reform wouldn't produce the "leapfrogging" effect necessary to put the U.S. at the top of business competitiveness rankings, he said, adding that he would refuse to settle for simply cutting tax rates because "that won't even get us to the middle of the pack."

"Frankly, we're getting our brains beat out because our competitors are beating us with lower rates, they no longer tax worldwide, and they border adjust, all of which we have to do to be able to compete and win," Brady said.

Brady, however, did not rule out altering the border-adjustable tax, saying that House Republicans were working on "significant modifications" to how the tax would be designed and phased in.

Olive Branch to Democrats

White House Chief of Staff Reince Priebus dismissed speculation of intraparty discord between the Trump administration and Republican leaders, saying March 26 that he believes the party will unify over the common goal of delivering a middle-income tax cut. But he also said that following the split between factions of the GOP over healthcare, Trump would be open to courting votes from Democratic lawmakers.

"I think it's time for our folks to come together, and I also think it's time to potentially get a few moderate Democrats on board as well," Priebus said during an interview on Fox News. He also said a border tax aimed at creating a more competitive global environment for U.S.-based companies was "very important" to Trump.

However, Senate Minority Leader Charles E. Schumer, D-N.Y., cast doubt on the prospects of Democrats crossing party lines to work with Republicans on tax reform. Tax cuts proposed in the American Health Care Act would have provided a huge tax cut to high-income taxpayers, Schumer said in a March 26 interview on ABC's This Week. "If they do the same thing on tax reform, and the overwhelming majority of the cuts go to the very wealthy -- the special interests, corporate America -- and the middle class and poor people are left out, they'll lose again."

Asha Glover contributed to this article.

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