21 October 2016 EY Center for Tax Policy: This Week in Tax Reform for October 21 Senate Democrats on tax priorities: As the election nears, top Senate Democrats are giving indications of what their priorities will be if they are able to win control of the chamber. Senator Charles Schumer (D-NY), a Finance Committee member who is poised to be the chamber's top Democrat next year and Majority Leader if control changes, on October 18 noted that he, Hillary Clinton, and House Speaker Paul Ryan (R-WI) share an interest in international tax reform tied to a large infrastructure program. "If you can get overseas money to come back here, even if it's at a lower rate than the 35% it now comes back at, and you can use that money for a major constructive purpose such as infrastructure — if you did an infrastructure bank, for instance, you could get $100 billion in equity in the bank and get a trillion dollars of infrastructure," he said in a CNBC interview. Asked by John Harwood whether it would be a "permanent lower rate, not a holiday rate," Schumer responded affirmatively, saying, "You can't do a one-shot deal." Democrats would need a net gain of four seats to gain the Senate majority if Clinton is elected president, and five seats if Donald Trump is elected. Harwood noted that Schumer would have a narrow majority if Democrats win control of the chamber, and asked how he would handle more liberal senators like Elizabeth Warren (D-MA) and Bernie Sanders (I-VT) trying to pull a potential Democratic president and Senate to the left. "Look, they know we've got to get things done," Schumer said. Meanwhile, an October 18 New York Times op-ed, "Companies Avoiding Taxes" noted the bipartisan common ground on overhauling the corporate tax code and reported Senate Finance Committee Ranking Member Ron Wyden (D-OR) — who is in line to return to the Committee chairmanship if Democrats take control of the Senate — as saying his first priority in that situation would be major legislation to "improve roads, bridges and public transit systems (and create jobs)." The second priority would be a corporate tax bill to pay for the infrastructure, said the op-ed by David Leonhardt. Appearing on MSNBC's Morning Joe on October 19, Senate Finance Committee member Mark Warner (D-VA) lamented the inability of Congress to make progress on big-ticket issues but said next year represents a "fresh start" with a window of time when Congress must "meet this new administration halfway." Warner said "if we don't put points on the board between January and the August recess, then we will go back into lockdown gridlock because of the [20]18 cycles." He said one example of an issue that could be addressed is to respond to the "great appetite" among Americans to fix the nation's crumbling infrastructure: "There ought to be a way to get to yes, to say how do we finance and fund infrastructure." Asked specifically what tax reform would look like if the elections resulted in a President Clinton, Speaker Ryan, and Majority Leader Schumer, Warner noted that the United States has the highest nominal tax rate on the business side but is at the bottom in terms of collecting enough revenue. "I think we're going to have to look at a new revenue source, like a carbon tax, if we're going to get to the kind of rates we need for businesses to stay competitive in the world. And I think, again, there is, particularly from the business community side, a real opening to that," he said. Ryan wants swift action on tax reform: In October 14 remarks at University of Wisconsin – Madison, House Speaker Ryan said, "I really want to get tax reform running as quickly as possible. Our tax code is arguably — I wouldn't say arguably. It is the worst tax system in the industrialized world and it is causing us to lose a lot of jobs and competitiveness." He compared the 35% corporate tax rate to lower tax rates in other nations, and said it is killing competitiveness and job creation. "And more to the point, we have these goofy international tax laws that if a company sells something overseas, makes money overseas, builds it here, they can't bring that money back and reinvest it without getting a huge tax consequence," Ryan said. He said by one estimate, the House Blueprint on tax reform could create as many as 1.7 million new jobs and add about 10% growth to the economy. "So, first thing out of the gates is a budget that gets tax reform, that gets this debt and deficit under control, and gets our military what they need," Ryan said. Brady calls for 'Reaganesque' tax reforms: In an October 20 National Review op-ed, Ways and Means Committee Chairman Kevin Brady (R-TX) said House Republicans believe that "now is the time to move forward with bold, pro-growth tax reform." To that end they released their June 24 Blueprint on tax reform as "the first consensus proposal put forward by House Republicans to overhaul the tax code since the Reagan reform of 1986," Brady said. He said the Blueprint would lower tax rates "on American job creators of all sizes" and "level the playing field for U.S. businesses and workers by transforming our nation's outdated international tax system into one of the most modern, pro-growth systems in the world." Brady said the 1986 effort was successful due to public disgust with the tax system, bold ideas in Congress, and the leadership of President Reagan. "House Republicans recognize that many of these same factors are present today … " Chairman Brady said. "For America to see success in this crucial effort, our next president must be equally committed." Final presidential debate: The presidential candidates sought to distinguish their positions on tax issues during their final debate on October 19. Hillary Clinton — consistent with Schumer's comments — described her plans for "the biggest jobs program since World War II, jobs in infrastructure and advanced manufacturing," as well as clean energy. She also discussed her planned efforts to aid small businesses and make some higher education tuition-free, paid for by having "the wealthy pay their fair share" and "corporations make a contribution greater than they are now to our country." Clinton said her opponent's "whole plan is to cut taxes, to give the biggest tax breaks ever to the wealthy and to corporations, adding $20 trillion to our debt, and causing the kind of dislocation that we have seen before, because it truly will be trickle-down economics on steroids." She later said Trump's plan would add up to three times more than the tax cuts under the Bush administration, and affirmed her pledge not to raise taxes on anyone making $250,000 or less. Donald Trump said Clinton's plan is going to raise taxes. "Her tax plan is a disaster," he said. "We will have a massive, massive tax increase under Hillary Clinton's plan." Trump said his own plan is "to cut taxes massively. We're going to cut business taxes massively." "The tax code, on the business side and the personal side, is a rotting economic carcass. All these games are significantly eroding the American tax base." — Senate Finance Committee Ranking Member Ron Wyden (D-OR), in October 18 New York Times op-ed
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