This week (February 1-5)

Congress in: The House and Senate are in session this week.

Brady speech at Heritage: On Monday, February 1 (at 1:00 p.m.), Ways and Means Committee Chairman Brady will be the keynote speaker at The Heritage Foundation's launch of the 2016 Index of Economic Freedom. His remarks will focus on how the Committee is working to help increase economic freedom and deliver opportunity to all Americans.

Ways and Means retreat: Also on Monday afternoon, House Ways and Means Committee Republicans will hold a retreat at the Library of Congress.

Ways and Means hearing: The first Ways and Means Committee hearing of the year will be held on February 2 (at 10:00 a.m.), and will focus on "reaching America's potential through pro-growth policies that deliver opportunities for all Americans." Witnesses:

— Doug Holtz-Eakin, President of the American Action Forum

— Kevin Hassett, State Farm James Q. Wilson Chair in American Politics and Culture at the American Enterprise Institute, where he is also a resident scholar and Director of Economic Policy Studies

— Stephen Moore, Distinguished Visiting Fellow at The Heritage Foundation's Project for Economic Growth

— Jared Bernstein, Senior Fellow at the Center on Budget and Policy Priorities

Last week (January 25-29)

Furman on tax reform: During a January 26 appearance on CNBC's "Squawk Box" and a speech to the New York State Bar Association (NYSBA) Tax Section the same day, Jason Furman, chairman of the White House Council of Economic Advisers, expressed optimism over the prospects for bipartisan agreement on business and international tax reform, but not individual tax changes. "I think frankly the big obstacle is whether you also want to cut tax rates for high income individuals. And if you're insisting on doing that together with business tax reform, it's just not going to happen," he said on CNBC, adding that Republicans would like to use business tax reform "as a way to do a broader set of tax cuts." He said the President's Framework for Business Tax Reform in 2012 addressed the two main problems with the system: "[W]e have the highest tax rate of any advanced economy and we have a ton of ways for companies to avoid paying that tax rate."

During the NYSBA speech, Furman said the main difficulty in enacting tax reform is that it imposes concentrated costs with only diffuse benefits, which can be overcome in the case of business and international tax reform if the winners greatly outweigh the losers in an economic sense, if not in a revenue sense. "In contrast to our system of taxation of business income, I am not convinced that the genuine benefits of tax reform on the individual side — in terms of efficiency or simplification — are nearly large enough to propel a political dynamic where the economic winners overcome the economic losers from reform," Furman said. He said the current international tax system is problematic in collecting little revenue from the overseas operation of subsidiaries of US multinationals while imposing "substantial distortions by creating an incentive to undertake complex and inefficient tax reduction and capital structure strategies to keep earnings located overseas." Furman argued against making the top statutory tax rates the same on both corporate and individual income and suggested disentangling business tax reform from "the thicket of issues" raised by changes to the top individual income tax rates. "Moreover, cutting the top individual rate not only fails to achieve the objectives of tax reform, but would worsen budget deficits and primarily benefit high-income households and even many large businesses," Furman said.

Brady reacts to European Commission package: On January 28, the European Commission released an anti-tax avoidance package comprising four separate documents: a proposed European Union (EU) Anti-Tax Avoidance Directive; a proposed Directive implementing the automatic exchange of country-by-country (CbC) reports; a communication proposing a framework for a new EU external strategy for effective taxation; and a recommendation on the implementation of measures against tax treaty abuse. House Ways and Means Committee Chairman Kevin Brady (R-TX) issued a statement in response to the release: "It is clear that the European Union is moving full speed ahead to implement the OECD's BEPS project recommendations that will make it even harder for American companies to compete in the global market. If Washington continues to sit by idly in the face of these punitive policy changes, American workers will continue to be the victims of our irresponsible inaction. This demonstrates once again why we must move forward immediately with international tax reform. Our committee is working to make it easier for American companies to invest at home, compete abroad, and create more jobs for our workers." An EY Tax Alert has details detailing the anti-tax avoidance package.

Sanders corporate tax details: On January 29, Senator and presidential candidate Bernie Sanders (I-VT) listed proposals to "crack down on corporate tax avoiders," including:

— repeal deferral of offshore earnings;

— prevent corporations from "claiming to be a foreign company through the establishment of a post office box in a tax-haven country";

— eliminate tax breaks for big oil, gas, and coal companies;

— stop American companies from avoiding US taxes through inversions; and

— close "loopholes" that allow US corporations to artificially inflate or accelerate foreign tax credits.

Hatch on corporate integration: Senate Finance Committee Chairman Orrin Hatch (R-UT) said this week he would like to roll out his corporate integration proposal in March, in light of the fact that his staff is currently ironing out some elements and that a revenue estimate is expected between now and then. "There's a lot of interest in it because it may be the only bipartisan possibility for getting inversions under control, but also help our own businesses do better," Hatch told Bloomberg BNA in an article published January 28. Under corporate integration proposals, undistributed income would be taxed at the corporate level but income distributed to shareholders would be taxed only once.

Quote of the Week

"The tax code is riddled with unnecessary complexity, inefficiency, and unfairness. But, in pursuing the broader ideal of tax reform, we should not forget that fundamental tax reform is not necessary and may not even be sufficient to result in large improvements for tens of millions of people." — Jason Furman, chairman of the White House Council of Economic Advisers, January 26

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