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Tax Tuesday

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February 14, 2017

The debate over the Border Adjustable Tax feature of the House Blueprint continues to dominate the tax reform conversation.It is increasingly a point of focus around the country and in economic centers of American trading partners.  The Financial Times reported yesterday that the EU is already exploring options for legal challenge.
The only parlor game surpassing that debate in terms of oxygen consumption in D.C. is speculation about the forthcoming ‘phenomenal tax plan’ from the White House.  How much detail will be released?  Guessing ranges from a section in President Trump’s upcoming joint address to Congress February 28th to principles to defined policies.  Speaker Ryan and Chairman Brady will continue their full court press to have it align substantially with their proposal.  There is still debate on the subject among senior White House staff.  Newly confirmed Secretary of the Treasury, Steven Mnuchin, is sure to enter the discussion more forcefully as he settles in and builds out his team.
Tax reform remains more likely this Congress than any in recent memory and coalitions with varied interests are building around town.  With each passing week, the Senate makes stronger moves toward fulfilling their promise of pursuing their own path.  The count of Senate Republicans opposed to the BAT now numbers five.  Senators Cornyn and Hatch are promising a hard look and tough questions.  Good intel says members of the Finance Committee are exploring several options and asking Joint Tax for scores.
Bonus note for tax geeks: the Republican Steering Committee met today and selected Rep. Mike Bishop (R-MI) to replace HHS Secretary Tom Price on the elite committee. Other contenders (likely to earn a seat before long) include: Barbara Comstock (R-VA); and Darrin LaHood (R-IL). Three other members of the tax writing committee have announced this is their last term in Congress (Sam Johnson, Lynn Jenkins, Kristi Noem).
Below are additional highlights from the press about recent developments in tax policy:

February 7, 2017

While many are tracking the latest tweet from POTUS or color beyond 140 characters offered by the Trump Administration, it is important to remember that healthcare reform will move first.  In other words, there is more than enough time on the clock for fortunes to change multiple times.

Of note – among the 460 Senate confirmed Administration appointments, the Assistant Secretary for Tax Policy has yet to be named. However, Shahira Knight was named to the National Economic Council with the tax policy portfolio.

Last week, Chairman Hatch (R-UT) at his speech before the U.S. Chamber of Commerce to reiterate his intention that the Senate will produce its own tax reform plan.  Senator Cornyn (R-TX) has asked for hearings at Senate Finance to review the House BAT proposal and Senator Cotton (R-AR) is airing his concerns over the BAT with colleagues.

Chairman Hatch noted in his speech that he’s asked about the BAT everyday he’s in the Capitol.  It is consuming all the oxygen on tax reform at the moment.  So we give you more depth on the BAT:

Finally, since healthcare reform will go first; readers should not lose sight of all the taxes wrapped in heathcare reform that will be dealt with through that repeal/replace/repair/reform process as opposed to in Tax Reform.

Below are additional highlights from the press about recent developments in tax policy:

January 31, 2017

The Prime Tax Team will be offering a regular update on the tax reform debate for you on Tuesdays.  We will highlight the key developments and insights you need to know to cut through the noise.  If you want more details, give us a call or drop us an email.

Speaker Ryan said last week from the Republican retreat in Philadelphia that the ACA repeal/replace bill, the wall at the border and tax reform would all be done (in the House) by the August recess.  My colleague responded – “When pigs fly.” White House spokesman Sean Spicer yesterday would not commit to finishing tax reform this year.  Which begs the question about how fast tax reform can move?  With the tax writers focused on replacing the Affordable Care Act in February and the debt limit authority expiring in mid-March; it seems that the band width is narrow.  However, we believe that Ways and Means staff are indeed at work crafting a bill that we may not see until April or May.  Then it is a question of whether the President will support the House Blueprint for Tax Reform .

The President has been a bit all over the board on the subject and Speaker Ryan has suggested that school is still “in” as far as informing/convincing the President that he should be on board. There is huge demand among hill staff for explanations and context for the tax reform proposals.

Politico’s Morning Tax noted that President Trump and his folk have suggested that tax reform be completed without having to pay for all of it you can read it here.  Republicans on the House Ways and Means Committee are thinking of calling retail chief executives up to the Hill in a “pre-emptive strike” meant to “mute business opposition to their tax overhaul proposal (specifically the border adjustable tax),” the Washington Examiner’s David Drucker reports here. The race is on from interests seeking exemptions from the BAT feature of the Blueprint.

Below are additional highlights from the press about recent developments in tax policy:

  • This GOP tax plan really will help the middle class- Denver Post  (Jan 25)
    “Sen. Mike Lee, R-Utah, has already established that he is willing to break from the pack on tax policy. Now he is proposing another change in GOP tax policy. Instead of seeking to cut taxes on capital gains and dividends, as Republicans have been trying to do for decades, he would raise them. But at the same time he would be bolder than his colleagues about corporate taxes. Where most Republicans want to cut corporate rates – President Donald Trump ran on cutting them to 15 percent – Lee wants to abolish the tax altogether.”
  • Trump-era tax reform could be coming for your toys- Washington Post  (Jan 27)
    “President Trump has talked often of overhauling America’s tax code with an eye toward encouraging U.S. companies to make things stateside. And under a tax reform plan being touted by Republican congressional leaders, Woldenberg estimates that his company’s tax bill would jump to an eye-popping 165 percent of its earnings. He expects that would push him to raise his prices 10 to 15 percent, and given those higher prices, he believes his sales volume will plummet around 40 percent.”
  • Howls Over Import Tax Complicate Plans to Overhaul Code- New York Times (Jan 29)

“But there is a broader lesson in that single dispute: Any rewrite of the tax code – especially if it seeks to raise roughly the same amount of revenue that the current code brings in – will leave winners and losers. And the losers tend to make far more noise than the winners. If the president is spooked by those howls, a major tax measure that both the president and Congress have promised may never happen.

January 24, 2017

The Prime Tax Team will be offering a regular update on the tax reform debate for you on Tuesdays. We will highlight the key developments and insights you need to know to cut through the noise. If you want more details, give us a call or drop us an email.

RSC Chairman Mark Walker announced a unanimous decision by the RSC Steering Committee this morning that they expect the FY2018 Budget to balance within ten years. One of the most fascinating stories to unfold across the policy spectrum during the next four years will be how President Trump’s Administration reconciles its agenda with fiscal conservatives.

Chairman Brady continued his full court press to promote his Blueprint for Tax Reform at the U.S. Chamber of Commerce this morning. You can access his complete remarks here.

Politico’s Morning Tax has an interesting update on the politics around the Border Adjustable Tax feature of the House Blueprint you can read it here. For those of you tracking the Estate Tax Valuation Rules announced last year – the morning tax team also reports that President Trump’s hold on new regulations has ended this change.  You can read Chief of Staff Reince Priebus’ memo to the agencies here.