Open­ing pitch on tax over­haul

Job cre­ators need break, AT&T of­fi­cial tells panel, but Democrats balk

The Dallas Morning News - - BUSINESS - By TOM BENNING Wash­ing­ton Bureau tben­ningy­dal­las­news.com

WASH­ING­TON — House Repub­li­cans are turn­ing to cor­po­rate Amer­ica to make their open­ing pitch for a tax over­haul.

A House Ways and Means Com­mit­tee hear­ing held Thurs­day on muchdis­cussed plans to re­vamp the na­tion’s tax code leaned heav­ily on tes­ti­mony from the busi­ness big­wigs who could be among the big win­ners from pro­pos­als to lower cor­po­rate tax rates and sim­plify the sys­tem.

And head­lin­ing that ef­fort was AT&T, the Dal­las­based tele­com giant.

“We need to re­duce the top cor­po­rate rate,” said John Stephens, the com­pany’s chief fi­nan­cial officer. “This is the quick­est, most straight­for­ward way to jump-start in­vest­ment in our coun­try.”

The hear­ing marked Congress’ first for­mal at­tempt this year to grap­ple with the na­tion’s con­vo­luted tax code.

Repub­li­cans are push­ing for a sweep­ing over­haul that they say would spark eco­nomic growth by pro­vid­ing re­lief to busi­nesses and in­di­vid­u­als alike. And there’s added ur­gency as GOP lead­ers look to talk about any­thing other than the lat­est drama sur­round­ing Pres­i­dent Don­ald Trump.

But the at­ten­tion on busi­nesses — and how they’ll ben­e­fit — only sharp­ened de­bate.

Democrats con­tinue to crit­i­cize the pro­pos­als as overly gen­er­ous to the rich. Repub­li­cans dis­agree on the re­vamps’ fun­da­men­tal

el­e­ments, par­tic­u­larly as it re­lates to the cor­po­rate world. And loom­ing over the en­tire de­bate is how to pay for such an ex­pan­sive re­boot.

Top House Repub­li­cans, how­ever, said the need for a busi­ness fo­cus was ob­vi­ous.

“Wash­ing­ton must take less from Amer­ica’s job cre­ators so they can in­vest more in their busi­nesses, their work­ers, and their fu­tures,” said Texas Rep. Kevin Brady, the Repub­li­can who leads the tax panel.

A tax re­vamp has long been on the agenda in Wash­ing­ton.

It’s been 30 years since law­mak­ers re­con­fig­ured the code in any com­pre­hen­sive way. Of­fi­cials in both par­ties agree that the cur­rent sys­tem is bro­ken. And with the GOP con­trol­ling the White House and Congress, the push moved to­ward the top of the leg­isla­tive list.

Democrats have fo­cused their mes­sag­ing on what a tax over­haul would mean for mid­dle-class Amer­i­cans, say­ing that the pro­pos­als at hand do too much for wealthy in­di­vid­u­als and com­pa­nies. And some of­fered lit­tle sym­pa­thy Thurs­day for cor­po­rate ti­tans like AT&T.

“Ap­par­ently our tax code is out­dated, it’s full of loop­holes, it doesn’t work very well,” said Austin Rep. Lloyd Doggett, a high-rank­ing Demo­crat on the panel. “But the wit­nesses be­fore us today are com­pa­nies that seem to have done pretty well un­der that sys­tem.”

Repub­li­cans like Brady, how­ever, ar­gue that it’s not that sim­ple.

Cor­po­rate tax re­lief stands at the cen­ter of most every GOP pro­posal: Lower the rates — to 15 per­cent in Trump’s plan. Ex­tend that break to “pass-through” busi­nesses that pay taxes through their own­ers’ per­sonal re­turns. Al­low busi­nesses to write off the ex­pense of cap­i­tal in­vest­ments.

The idea is that those changes end up boost­ing av­er­age Amer­i­cans.

“This will in­crease in­vest­ment” said Stephens of AT&T. “In­creas­ing in­vest­ment in­creases jobs. When you in­crease jobs, you in­crease wages.” It also means trade-offs. House GOP lead­er­ship has stressed the need for a tax over­haul that doesn’t in­crease the fed­eral deficit, even if Trump hasn’t made that same com­mit­ment. And to ac­com­plish that for a mas­sive re­vamp that also in­cludes lower in­di­vid­ual rates, rev­enue has to come from some­where.

Those funds could come from a di­vi­sive bor­der ad­just­ment tax, or from elim­i­nat­ing any num­ber of beloved de­duc­tions and ex­emp­tions.

Al Drago/The New York Times

Rep. Kevin Brady, R-The Wood­lands, chairs a House Ways and Means Com­mit­tee that opened a hear­ing on tax pol­icy Thurs­day. “Wash­ing­ton must take less from Amer­ica’s job cre­ators,” Brady said.

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