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Republicans jockey for tax reform preferences as committees write bill

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Republicans jockey for tax reform preferences as committees write billTop Republicans continue to stake out public positions on key elements of tax reform in an effort to shape the bills that tax writers are crafting over the August recess. Congressional and White House leadership recently agreed on a set of broad principles for tax reform that gives the tax-writing committees the green light to introduce legislation in September. But the lack of agreement on details has left Republicans still jockeying to influence the outcome. The biggest area of contention remains the size of a corporate rate cut.

Key lawmakers are beginning to acknowledge that a 15% or 20% corporate rate is becoming unrealistic now that the revenue-raising border adjustability proposal is off the table. “It would be kind of miraculous if we could get it down to 25% or less,” Senate Finance Committee Chair Orrin Hatch, R-Utah, said recently. Gary Cohn, one of President Trump’s top economic advisers, said he is hoping to get the rate below 23%.

The more conservative members of the party are still pushing for more aggressive rate goals. Rep. Mark Meadows, R-N.C., chair of the influential House Freedom Caucus, said he needed a rate in the teens and said it would be harder to support anything higher than 19%.

Other elements of the tax reform plan are also up for debate. The Republican tax reform principles promise unprecedented expensing, but White House Director of Legislative Affairs Marc Short said the administration does not anticipate fighting for full expensing.

“That's not the hill we want to die on,” he said.

One of the most difficult issues remains how to provide a rate cut for pass-through businesses that are not taxed at corporate rates. Senate tax writers Rob Portman, R-Ohio, and John Thune, R-S.D., both said the Finance Committee continues to struggle with the issue. Grant Thornton has been a strong supporter of providing fairness to pass-through businesses as part of tax reform.

Contact Dustin Stamper
Director, Washington National Tax Office
T +1 202 861 4144

Shamik Trivedi
Senior Manager, Washington National Tax Office
T +1 202 521 1511

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