This week (November 14-18)

Congress back: The House and Senate return for a post-election lame-duck session. The agenda could be less robust given the election outcome, with Republicans less inclined to compromise with Democrats given their degree of control next year. "It is very exciting to be going into a lame duck where we have a Republican president following right after it," Speaker Ryan said November 9. The focus is expected to be extending government funding beyond December 9 into sometime in 2017. Some members have pushed for 2016 expiring tax provisions to be addressed in the lame-duck session, while others are opposed to doing so. Asked about the matter November 9, Senate Leader McConnell said, "You know, I'm not sure we're doing extenders, are we? I don't know the answer to that."

Last week (November 7-11)

Reform on tap in Trump presidency: In the wake of a suspenseful election night and spirited reactions to the outcome, President-elect Donald Trump has confirmed that the base-broadening, rate-lowering tax reform he proposed during the campaign is a top priority. "I think that we are going to do some absolutely spectacular things for the American people … We are going to lower taxes, as you know," Trump said following a meeting with House Speaker Paul Ryan (R-WI) on November 10. "We are going to fix health care and make it more affordable, and better." Following a meeting with Senate Majority Leader Mitch McConnell (R-KY) during his trip to the Capitol, which followed a meeting with President Obama, Trump told reporters "we're looking at jobs — big league jobs." McConnell said he and Trump "had a really good discussion about the transition, issues that we obviously agree on and he's anxious to get going early and so are we," McConnell said. "It was a first class meeting." The Trump transition Web site launched on November 9 stated: "Republican efforts to reform the code since 2008 have been blocked in one way or another by a hostile White House and Democrat congressional leadership. They believe Americans should pay more in taxes, not less. While there is bipartisan recognition on an urgent need to reform the tax code now, there also is a growing consensus that presidential leadership will be required to achieve success. A Trump Administration tax plan can be summarized as lower, simpler, fairer, and pro-growth."

Ryan says he, Trump on 'same page:' During a Fox News interview November 10, Speaker Ryan said he and President-elect Trump are already discussing "how to execute plans, how to get the transition working, how to make 2017 a success for the American people that just asked him to be president of the United States." Ryan repeated examples of the ways in which the US tax code is stifling economic growth, including that US businesses are taxed at much higher tax rates than foreign competitors and have their earnings trapped overseas. "Donald Trump put out a tax plan in the campaign that is almost the same" as the House Republican tax plan, Ryan said. "So we are absolutely on the same page on reforming the tax code … That is something that we clearly talked about today and that's something that we're obviously going to be working on as part of our big agenda this year." With the Republican victories in the elections — controlling the White House and both chambers of Congress next year — the House Republican Blueprint released June 24 and its overlap with Trump proposals will become the focal point for tax changes. During the campaign, Trump adopted in his own tax plan the Blueprint's individual income tax rates of 12%, 25%, and 33% as well as a pivot toward expensing over interest deductibility. The House plan proposed expensing in conjunction with eliminating the deductibility of net interest expense, while Trump proposed limiting expensing to manufacturers; those who elect expensing will lose the deductibility of corporate interest expense.

Trump proposed a 15% corporate tax rate and 15% pass-through rate, and advisers said they would take steps to prevent people from taking advantage of the disparity between the pass-through and individual tax rates. House Republicans proposed a 20% corporate tax rate, and 25% for pass-through entities. Both plans called for a reduced tax rate on the repatriation of accumulated foreign earnings: Trump at 10%, the Blueprint at a 8.75% tax rate for cash or cash equivalents, and 3.5% otherwise. It remains to be seen if tax reform plans attract support from any Democrats next year; if not, Republicans may turn to the budget reconciliation process to circumvent the 60-vote filibuster threshold in the Senate. Prior to the election, Speaker Ryan discussed the potential for using reconciliation to enact much of his "Better Way" agenda, but has declined to comment since the election.

Brady says tax code redesign top priority: On CNBC's "Closing Bell" November 9, House Ways and Means Chairman Kevin Brady (R-TX) echoed Ryan's comments about similarities between the House Blueprint and Trump's plan and said a tax code redesign is the top item to improve the economy. "It's really important that we redesign the way we tax so our companies can compete and win anywhere in the world, especially here at home," Brady said. "We need to make sure those dollars are flowing back to the United States for jobs, for manufacturing, for research. We want to make sure we eliminate every tax incentive to move U.S. jobs or headquarters or research overseas … "

Quote of the Week

"Anyone who fills out a tax form knows how harmful the U.S. tax code is today — punishing hard work, savings, and investment. American frustration with the tax code has prompted two decades of Washington, D.C. blue ribbon commissions and detailed plans to reform the code. These efforts have not changed the tremendous burden Americans face in complying with the U.S. tax code. If a tax code were designed to punish hard work, thrift, and investment, the current U.S. tax code could serve as a blueprint." — Trump transition Web site, November 9

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