TAX CODE DENOUNCED BUT LEGISLATION STILL FAROFF
Lawmakers agree on importance of rewrite, but big issues remain
Lawmakers and corporate executives denounced the tax code this week and outlined plans for a comprehensive overhaul they said would boost job growth and global competitiveness. But the House Ways and Means Committee hearing touted as a first step toward action highlighted myriad differences Congress must overcome before it can pass a bill.
“We operate in a fiercely competitive global economy, and we need a fiercely competitive tax system, and we need it now,” David Farr, chairman and CEO of St. Louis- based technology company Emerson Electric, told the committee.
But despite President Trump’s April 26 announcement of a tax overhaul plan, many details remain to be filled in by the administration and Congress, even while some members have begun organizing opposition to parts that have been announced.
Some lawmakers have begun discussing passing a temporary tax cut rather than a permanent rewrite of the corporate and individual tax codes, an idea Ways and Means Chairman Kevin Brady, R- Texas, rejected.
“Now is the time to go bold, now is the time to deliver real results to the American people,” Brady said at the hearing.
The hearing showed a border adjustment tax proposed by House Republicans last year remains on the table despite the fact it was excluded from Trump’s plan.
Border adjustment would subject imported products to a 20% tax that exporters would not have to pay, and it is designed to make domestic manufacturers more competitive and counter the trend of corporations moving operations overseas. It has run into fierce opposition from retailers, who say it would raise the cost of consumer goods such as clothing and toys made almost exclusively overseas, and many in Congress have questioned the need for it.
Witnesses invited by committee Republicans, including Zachary Mottl of Atlas Tool Works in Lyons, Ill., said they are paying border adjustment taxes when they sell their products overseas, while foreign competitors selling in the United States are not.
“It’s clear that the U. S. is out of alignment with the rest of the world when it comes to globally competitive taxation schemes,” Mottl said.
The Trump plan outlined by Treasury Secretary Steven Mnuchin and economic adviser Gary Cohn would cut the corporate tax rate from 35% to 15% while eliminating most deductions. For individuals, Trump would reduce the number of brackets from seven to three and bring the top bracket down from 39.6% to 35%, but income cutoffs for the different brackets were not announced.
The plan called for doubling the standard deduction, repealing the estate tax and eliminating nearly all deductions except for charitable contributions and mortgage interest.
Rep. Richard Neal of Massachusetts, the top Democrat on the committee, said historical data show the wealthiest people did much better in recent decades than the middle class, and he does not want to add to that by changing the tax code.