New details lacking in joint press release on tax reform
TAX ALERT |
Heading into the Aug. recess, a joint statement on tax reform was released by House Speaker Paul Ryan (R-WI), Senate Majority Leader Mitch McConnell (R-KY), Treasury Secretary Steven Mnuchin, National Economic Council Director Gary Cohn, Senate Finance Committee Chairman Orrin Hatch (R-UT), and House Ways and Means Committee Chairman Kevin Brady (R-TX). The press release contains less detail than many anticipated but it does reference a few principles that indicate the current thinking of the Republican leaders who issued the release. According to the release, key goals of tax of any tax reform legislation should be:
- Lowering the business tax rate to make American businesses competitive globally
- Lowering the tax rate for small businesses (which are primarily passthroughs) to be comparable to larger businesses
- Increasing expensing for capital improvements
- Bringing jobs and foreign earnings back into the US
The most specific item referenced in the statement is that border adjustability will no longer be pursued. While it was widely reported that support had been diminishing for a border adjusted tax, Republican leaders had not yet formally indicated that it was no longer being considered as part of tax reform.
Overall, the release emphasizes making taxes simpler, fairer, and lower for middle class American families, small businesses and job creators. It also states the regular legislative process of working through committees, holding hearings and going through the markup process to draft legislation that will be considered by the full House and Senate will be followed. This regular process does not preclude the use of reconciliation, which is a process that could still be used to prevent the need to get 60 votes to avoid a filibuster. However, the statement indicates that Republicans do intend to work with Democrats in drafting the legislation. It is likely that it will now be sometime in September before we get any further details on what is likely to be included in tax reform.