Eversheds Sutherland Tax Reform Law Blog
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DeSantis Joins Growing Ranks of Republicans Opposed to Border Adjustment Tax

Ron DeSantis (Fla.), is the latest member of the House Republicans to come out against the border adjustment tax.  DeSantis argues that it is a major impediment to tax reform, speculating that its inclusion in reform legislation would not garner the necessary support from Congress or the White House.  DeSantis promotes pairing tax cuts and spending cuts to fund tax reform and argues revenue neutrality is not necessary. GOP rep: Border-adjustment tax could ‘sink’ tax...
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Treasury Secretary Mnuchin Says Pass-through Rate Cut Not for the Wealthy

On May 18, Treasury Secretary Mnuchin attempted to assuage fears that the Trump tax plan will favor the wealthy. Trump’s tax reform outline proposes a 15% tax rate on business income, including income of individuals derived from pass-through entities, which is currently subject to a top marginal rate of 39.6%. While the outline includes few details, some commentators have expressed concern that the change will provide outsized benefits to the top 1% of households and the largest, most profitable pass-throughs. Responding to a question by Senator Elizabeth Warren regarding the pass-through...
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States Dubious of 2017 Tax Reform

State officials’ concerns over holding special sessions and preparing for federal tax reform in 2017 are waning. Some believe that federal tax reform is unlikely to occur at all, pointing to the controversies enveloping the Trump administration, a partisan Congress, and prioritization of repealing and replacing the Affordable Care Act. Karl Frieden, vice president and general counsel of the Council On State Taxation (COST), while commenting that the true deadline for tax reform is likely the 2018 elections, posits that the implementation period following enactment of a federal tax law, even...
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Key Open Topics for Tax Reform

Chairman of the House Ways and Means Committee Kevin Brady and Speaker Paul Ryan concur that the White House and Republican members of Congress are eighty percent in agreement on tax reform legislation.  Issues constituting the remaining twenty percent include: 1) the permanence of tax reform, 2) individual and corporate tax rates, 3) the border adjustment tax, 4) full expensing or interest deductions for business investments, and 5) whether or not to pair tax reform with infrastructure. Read more:  Five tax reform issues dividing...
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Tax Reform for Christmas

Despite controversy surrounding the border adjustment tax proposal, House Speaker Paul Ryan hopes that Congress will present a tax reform bill to the president by the December 23rd recess. Treasury Secretary Steven Mnuchin shared the same goal earlier this week, stating that the objective is to accomplish tax reform by year’s end. Paul Ryan Wants to put Reform on Trump’s Desk by Christmas
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Brady Suggests Reports of Border Adjustment Tax’s Death Are Greatly Exaggerated

House Ways and Means Chairman Kevin Brady, acknowledging the dissension surrounding the border adjustment tax, remains stalwart that it is a “critical” component of the House GOP’s tax reform agenda. Chairman Brady reports working with the White House and the Senate to resolve opposition to the plan, projected to raise nearly a trillion dollars in revenue to offset a proposed corporate tax rate cut. Border Adjustment Tax is ‘Critical’ Part of Tax Reform, Chief GOP Tax Writer...
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Senate Republicans Offer No Alternative to Proposed Blueprint Revenue Raisers

Senate Finance Committee Chairman Orrin Hatch has suggested that the three revenue raisers (i.e., the border adjustment tax, elimination of certain itemized deductions and elimination of business interest deductions) proposed in the House Republicans’ Blueprint do not have support in the Senate, and he does not believe they will pass. However, Senate Republicans have yet to offer an alternative to these proposals. Without the elimination of some tax breaks, Congress will be unable to lower corporate or individual tax rates without increasing the federal deficit. Thus, the Senate may prove to...
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Former Speaker Boehner Does Not Believe Tax Reform Will Pass

During a keynote address at an energy conference, Former Speaker of the House John Boehner stated that his faith in the passage of tax reform was fading and referred to the House Republicans’ and Administration’s tax reform initiatives as a “bunch of happy talk.” Boehner also stated that he believes the border adjustment tax is dead and his odds for passage of tax reform, generally, are now 60/40. Read more:  Boehner: Tax reform is ‘just a bunch of happy...
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Border Adjustment Tax Faces Looming Demise

House Speaker Paul Ryan, on Wednesday, acknowledged that tax reform legislation could exclude a border tax provision.  The controversial tax has faced criticism from several fronts, including some of Ryan’s fellow House Republicans, as well as the Senate and the White House.  Treasury Secretary Steven Mnuchin has confirmed that President Trump is not in favor of backing a border adjustment tax, and Mnuchin expressed his desire for the House to move past the proposal for the sake of overall tax reform. Read more: Border-Adjustment Tax Proposal at Death’s...
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Ways and Means Committee Hears Testimony on Border Adjustment Tax

On Tuesday, May 23rd, the House Ways and Means Committee, led by Chairman Kevin Brady, held its second hearing on tax reform, entitled “Increasing U.S. Competitiveness and Preventing American Jobs from Moving Overseas.”  The hearing concentrated on the practicality and effects of the proposed border adjustment tax on the economy.  Chairman Brady was critical of the ‘Made in America’ tax on domestic products and tax breaks for foreign goods.  Chairman Brady’s prepared Opening Statement is available here.  Ranking minority member Richard Neal, while supporting bipartisanship and the need for a...
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Joint Committee on Taxation Releases Report on Destination-Based Taxes and Border Adjustment.

In anticipation of the House Ways and Means Committee hearing on the border adjustment tax included in the House Republicans’ Blueprint, the Joint Committee on Taxation has released a report on destination-based taxes and border adjustment. The report discusses the rationale behind destination-based taxes and describes various proposals for destination-based taxes leading up to the Blueprint. The report also summarizes papers on the economic theory behind border adjustment and why it is theoretically trade neutral. It notes, however, that such studies do not necessarily speak to the...
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Koch Brothers to Push for Focus on Tax Reform

Billionaire Industrialists Charles and David Koch, via their Americans for Prosperity and Freedom Partners groups, will invest millions in the coming months to drive the conservative tax reform agenda amidst the Trump Administration’s distractions.  The Koch network has released a set of guidelines for change, mainly consistent with the White House proposal, condemning the contemplated border adjustment tax while promoting lower corporate rates and the elimination of certain deductions.  Kochs Unveil Campaign to ‘Jolt’ Stalled Tax Debate...
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House Ways and Means Committee Holds First Hearing on Tax Reform.

Led by Chairman Brady, the House Ways and Means Committee held its first hearing on tax reform Thursday. The hearing and witnesses focused mainly on provisions advanced by House Republicans in their Blueprint, including immediate expensing and the impact of a lower corporate tax rate on investment and manufacturing. The witnesses testifying before the Committee included: John J. Stephens, Senior Executive Vice President and Chief Financial Officer, AT&T Inc. Mr. Stephens’ remarks focused on the economic growth through investment that would occur through lowering the corporate tax rate...
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Differing Opinions Over Economic Growth

A study, commissioned by Koch Industries and conducted by Quantria Strategies, concludes that a corporate tax rate cut is more effective than full expensing to achieve economic growth.  A recent report issued by the Joint Committee on Taxation (JCX-19-17), however, offers a contrary view, suggesting that slowing cost recovery methods could reduce investment despite a corporate tax rate reduction. Economic Analysis of Corporate Tax Reform Policy Options – Tradeoffs Affecting Revenue Growth Assumptions (Quantria Strategies) Economic Growth and Tax Policy...
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Despite a Bleak Outlook, Tax Reform Hearing on Border Adjustment Tax Announced

The House Committee on Ways and Means will hold a hearing on May 23 at 10:00 a.m., entitled “Increasing U.S. Competitiveness and Preventing American Jobs from Moving Overseas,” focusing on the impact of a border adjustment tax and other policies on job, investment and economic growth in the United States. While Senate Majority Leader Mitch McConnell does not foresee legislation incorporating a border adjustment provision surviving the Senate, he remains hopeful that tax reform can be completed during the current Congress. Brady Sets Border-Tax Hearing Even as McConnell Predicts Failure...
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