27 February 2017 EY Center for Tax Policy: This Week in Tax Reform for February 24 The Senate will vote on the nomination of Wilbur Ross to be the Secretary of Commerce on Monday, February 27 at 7 p.m. House Speaker Paul Ryan (R-WI) has announced: "After the House returns following President's Day, we intend to introduce legislation to repeal and replace Obamacare." Trump administration on border adjustability: The Administration's view on the House Republican border adjustability proposal to exempt exports from tax but deny deductions for all imports remained the biggest question of the tax reform debate, and has not been made crystal clear despite some new reports. Axios reported February 24 that National Economic Council Director Gary Cohn told a group of CEOs that the White House does not support the House Republican version of a border adjustment tax, though the Administration disputed the report, saying Cohn did not state support or opposition. Asked about the House proposal in a February 23 Reuters interview, President Trump said, "It could lead to a lot more jobs in the United States. … I certainly support a form of tax on the border because everybody else does. We're the only country, we're one of the very few countries, possibly the only country, that has no border tax." The President previously called for an unspecified border tax but had not made recent public comments. "And that's not a tax to the consumer, because that's going to be a tax to companies and it's going to be a tax to other countries much more so than it is to the consumer," the President said, adding that companies and jobs would return as a result. Returning jobs to the United States was the focus of the President's February 23 meeting with the manufacturing council group of CEOs and, he said, is a campaign promise that was a factor in the election and on which he intends to deliver. "My administration's policies and regulatory reform, tax reform, trade policies will return significant manufacturing jobs to our country," President Trump said during the meeting, which preceded the Reuters interview. The Wall Street Journal cited an unnamed participant as saying the President left the door open for border adjustability. The New York Times reported that, during a small group session on taxes and trade prior to the meeting, executives were split over border adjustability, with leaders of import-reliant companies raising concerns. Axios cited a planning document saying the tax session was to be attended by Treasury Secretary Steven Mnuchin and NEC Director Cohn. Mnuchin eyes 'combined plan' made law before August: The Trump administration is "working closely with the leadership in the House and the Senate, and we're working on a combined plan" on tax reform that they want enacted by the August congressional recess, Treasury Secretary Mnuchin said February 23. In his first extensive interviews since being confirmed by the Senate on February 13, Secretary Mnuchin declined to provide details of the Administration's plan on tax reform or to take a position on the House Republican Blueprint's border adjustability component, saying it's too early to announce anything. In a CNBC interview, the Secretary said, "We're looking closely at the issues on the border adjusted tax. I spoke extensively with Paul Ryan and with Chairman Brady on this. We're looking at it. We think there's some interesting aspects. We think there's some concerns about it." Secretary Mnuchin said the Administration is listening to businesses, including during the several meetings President Trump has held with groups of business leaders: "We understand where people are, and we're going to have a plan that addresses these concerns." More generally, he said a focus is making the business tax competitive with the rest of the world and that "there's a consensus on the majority of where we are on tax reform." The Wall Street Journal February 23 reported Mnuchin as saying Treasury has concerns "about what the impact may be on the dollar" from a border-adjusted tax, and acknowledging that the August target is ambitious. "It could slip to later in the year," he said. On Fox Business News, Secretary Mnuchin said of the border tax, "One of the issues as you've pointed out is it has certain complexities; it has certain assumptions on what happens to the currency. These are complicated issues. We are taking this all into account." Timing and sequencing: With regard to timing of an announcement related to tax reform, during a meeting on the forthcoming budget President Trump repeated previous statements suggesting that tax reform under reconciliation must follow legislation related to the Affordable Care Act (ACA). "Healthcare is moving along nicely. It's being put into final forms. As you know, before we do the tax — which is actually very well finalized — but we can't submit it until the healthcare, statutorily or otherwise," the President said. "So we're doing the healthcare. Again, moving along very well. Sometime during the month of March, maybe mid- to early March we will be submitting something that I think people will be very impressed by." During a speech at the Conservative Political Action Conference (CPAC) February 24, President Trump said, "We're going to massively lower taxes on the middle class, reduce taxes on American business and make our tax code more simple and much more fair for everyone, including the people and the business." Graham says House plan won't get 10 Senate votes: The focus has been on the extent to which the Administration may adopt portions of the House Republican Blueprint, and while Senate Republicans don't have a tax reform plan of their own, several GOP Senators have suggested they don't like border adjustability. For example, on CBS's "Face the Nation" February 19, Senator Lindsey Graham (R-SC), who has jostled with Trump going back to the Republican primary, said Congress is stumbling and "tied up in knots," including on tax reform. "The House is talking about a tax plan that won't get 10 votes in the Senate," he said. "So it is not just the Administration that has got problems. Republicans in the House and the Senate have problems, and I hope we will get our act together." "Let me first say that our economic agenda, number one issue is growth and the first, most important thing that will impact growth is a tax plan. So we are committed to pass tax reform. It will be very significant. It's going to be focused on middle income tax cuts, simplification, and making the business tax competitive with the rest of the world, which has been a big problem and a lot of reasons why companies are leaving and cash is sitting offshore. So that's really our focus." — Treasury Secretary Steven Mnuchin, February 23
Document ID: 2017-0371 | |||||
