The American flag flies outside the U.S. Capitol in Washington, D.C., U.S. (Photographer: Andrew Harrer/Bloomberg)

House Republicans Recommit to Passing Tax-Law Overhaul This Year

(Bloomberg) -- Republican congressional leaders doubled down on their pledge to overhaul the U.S. tax code by the end of the year after party leaders abandoned a proposal to tax companies’ domestic sales and imports.

Having the Trump administration and top lawmakers reach consensus on key principles including no border-adjusted tax makes passing a tax bill this year more viable, House Speaker Paul Ryan and Kevin Brady, chairman of the House Ways and Means Committee, said in separate interviews on Fox News Channel’s “Sunday Morning Futures.”

“I feel much more confident that we’re going to stick the landing on tax reform,’’ Ryan said, referring to a successful end for a gymnastics routine.

Ryan said that rewriting the code was necessary for the U.S. economy to grow by 3 percent, a pace of expansion that the Trump administration has used as its assumption for budget planning.

Both Ryan and Brady also rejected a higher tax rate for the wealthy. White House chief strategist Steve Bannon has supported paying for middle-class tax cuts with a new top rate of 44 percent for Americans who make more than $5 million a year, according to a person familiar with his thinking.

Ryan declined to comment on Bannon’s reported view but said he supports the outline that the administration released in April with a top rate of 35 percent. “We’re not in the business of raising tax rates,’’ Ryan said.

44 percent

“I don’t intend on introducing a 44 percent tax rate in the Ways and Means Committee,’’ Brady said. “We’re going for growth, which means lower rates at every level.”

Republicans are moving to advance their bid to permanently rewrite tax laws after they announced they are ditching their plan for a border-adjusted tax after retailers and other import-heavy industries fought the proposal.

House lawmakers are now gearing up for an August push to craft new legislation in conjunction with aligned senators and the White House and a stepped-up campaign to sell the overhaul to the American public, Brady said.

“We’re uniting behind bold tax reform,” Brady said on Fox. “We want it as low as we can go.”

Low-Hanging Fruit

Brady declined to commit to a specific goal for a new corporate rates. Without the estimated $1 trillion in new revenue that the border-adjusted tax would have raised, Congress will need to find income from other areas to pay for the reductions, they said. The tax bill has to be compliant with rules that prohibit adding to the deficit after a decade for changes to be permanent, Ryan said.

Asked whether there is other “low-hanging fruit” to replace the $1 trillion in revenue lost by abandoning the border-adjusted tax, Brady said, “No there’s not.”

The commitment to complete the tax code rewrite in 2017 adds to an already full calendar when lawmakers return in the fall. The White House is also continuing to call for Congress repeal the Affordable Care Act after Senate Republicans failed to pass a bill last week.

Bloomberg
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