This week (July 10-14)

Congress in: The House and Senate are back in session after a one-week recess. Discussions among Republicans over how to proceed with Affordable Care Act (ACA) repeal and replace legislation are expected to continue in the Senate. The House Budget Committee could unveil and consider an FY 2018 budget resolution.

Ways & Means hearing: On Thursday, July 13 (at 10:00 a.m.), the House Ways and Means Tax Policy Subcommittee will hold a hearing on how tax reform will help America's small businesses grow and create new jobs. "Americans continue to witness how our current tax code stifles opportunities for small businesses and their workers in communities across our nation," Subcommittee Chairman Peter Roskam (R-IL) said upon announcing the hearing. "At our hearing, small business owners will share how tax reform can reverse that trend and make it easier for them to grow, create new jobs, and increase paychecks along Main Street."

Last week (July 3-7)

Brady says Republicans 'on pace' for September tax reform product: In a C-SPAN "Newsmakers" interview broadcast on July 2, House Ways and Means Committee Chairman Kevin Brady (R-TX) said tax reform discussions between Republican congressional leaders and Administration officials will continue over the weeks ahead and National Economic Council Director Gary Cohn's intention to present a unified proposal to Congress in September fits the timetable for enacting tax reform in 2017. Asked whether he expects to have a product when Congress returns in September from its summer break, Brady acknowledged that "a lot of work has to be done between now and then," but that "right now, we are on pace." Chairman Brady said the House Republican border adjustability proposal to exempt exports from tax but deny deductions for all imports is "bold," some have "fair concerns about how it would work" even with a five-year phase-in, and it could be shelved. He said the tax teams and principals involved in the negotiations are collaboratively looking at options for preventing companies from leaving the United States and creating incentives to bring them back. "At the end of the day, whether border adjustment in some form is part of the solution or if ultimately it's set aside for future study and we have arrived together at another approach on it, we have to solve that problem," he said. Asked whether there is currently a Plan B for how to prevent profits/jobs/companies from leaving the United States, Brady said a number of ideas are being looked at, including one of the options proposed by former Chairman Dave Camp (R-MI), with "refinements and modernization."

An FY 2018 budget resolution that is expected to include reconciliation instructions for tax reform legislation has yet to be considered in the House Budget Committee, in part because of a lack of agreement on at least $200 billion in mandatory spending cuts sought by conservatives who also want to tie cuts in welfare programs to tax reform. Moderate members and some committee chairmen who would be called upon to identify these cuts have expressed concern about the cuts. Chairman Brady said there are members who, in the context of the budget and reconciliation, want a down payment on welfare reform. "We ought to be open to how our Republican members feel they best can support a budget that not only balances over 10 years, actually has our priorities in spending, and clears the way for tax reform," he said. Budget Committee Chairman Diane Black (R-TN) said July 5 that she hopes to consider a resolution the week of July 10 and expressed confidence in navigating differences between conservatives and moderates, Roll Call reported.

Longer budget window seen as attractive option: Moving from a budget window of 10 years to 20 years is an attractive option for tax reform legislation, Marc Short, White House Legislative Affairs Director, said on "Fox News Sunday" July 2. Asked whether it is more important to have deficit-neutral tax reform or tax cuts, Short said, "What's most important is get the economy growing so people get back to work." Pressed on whether that means tax cuts, Short said, in the White House view it means tax relief. "But there's also an idea that Senator Toomey has put out that suggests that the budget window can be moved from 10 years to 20 years, which I think is an attractive option to allow us to do that," he said. Senator Pat Toomey (R-PA) has suggested the move in light of budget reconciliation rules that forbid tax changes that increase deficits beyond the budget window, arguing that making major tax reform temporary even for 10 years undermines its effectiveness. Short said tax relief will provide economic growth and "we're going to get to it this year."

Treasury regulation review: The Treasury Department July 7 identified eight regulations, including Final and Temporary Regulations under Section 385 on the Treatment of Certain Interests in Corporations as Stock or Indebtedness (T.D. 9790) and Final Regulations under Section 367 on the Treatment of Certain Transfers of Property to Foreign Corporations (T.D. 9803), as imposing an undue financial burden on US taxpayers or adding undue complexity to Federal tax laws. An Executive Order signed by President Trump April 21 called for Treasury to review all "significant tax regulations" issued on or after January 1, 2016, and to identify in an interim report those that impose undue financial burden, add undue complexity, or exceed statutory authority. The order further instructed Treasury to submit a final report to the President by September 18, 2017, recommending "specific actions to mitigate the burden imposed by regulations identified in the interim report." Notice 2017-38 identified specific regulations as unduly burdensome or complex and said, "Treasury intends to propose reforms — potentially ranging from streamlining problematic rule provisions to full repeal — to mitigate the burdens of these regulations in a final report submitted to the President." Treasury requested comments by August 7, 2017, on whether the regulations described in the Notice should be rescinded or modified, and how they should be modified.

Quote of the Week

"Ways and Means Republicans are also moving forward now on permanent, pro-growth tax reform because it is our single best opportunity to rev up our nation's economy. Working with President Trump and the Senate, we will deliver bold reforms this year that spur job creation, allow workers to keep more of their hard-earned paychecks, and improve the lives of all Americans for generations to come." - House Ways and Means Committee Chairman Kevin Brady (R-TX), July 7

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