Eversheds Sutherland Tax Reform Law Blog
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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 Says
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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 talk’
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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 Door
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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 (JCX-19-17)
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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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Congressional Republicans Undecided on Border Adjustment Tax

Despite support from Ways and Means Committee Chairman Kevin Brady, Paul Ryan’s proposed border adjustment tax appears to lack support among rank and file House Republicans, raising serious questions as to the likelihood of passage.  Even if the bill manages to garner the necessary votes to pass the House, Sen. Lindsey Graham has said that the legislation “…wouldn’t get 10 votes in the Senate.” House GOP not sold on Ryan’s Tax Reform Plan 
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Senator Mitch McConnell Believes Tax Reform Should Be Revenue Neutral

Senator Majority Leader Mitch McConnell stated in an interview that tax reform must be revenue neutral given the current national debt of $21 trillion and due to the lack of support from Democrats which will require Republicans to use budget rules that allow pushing through permanent tax changes with only 50 votes. Read more: McConnell Wants Revenue-Neutral Tax Plan, at Odds With Trump
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Tax Reform by End of Year Still a Goal

House Speaker Paul Ryan cautioned against creating an artificial deadline but still described overhauling the tax code by the end of 2017 as a goal, with the House, Senate, and White House all working together on comprehensive tax reform. Despite previous hesitancy regarding the border adjustment from the Trump Administration, Ryan defended the House Republicans’ proposed border adjustment tax, stating it was necessary since “all of [US] trade competitors…basically border adjust their taxes.” Read more here: Ryan:  Planets are aligned’ on tax reform
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Mnuchin Talks Tax Reform at G7 Meeting

U.S. Treasury Secretary Steven Mnuchin discussed tax reform at the G7 meeting in Italy. Mnuchin told reporters that G7 finance ministers are open to, and understand, President Trump’s new trade policies, however the G7 ministers expressed concern that the trend towards less redistributive tax and transfer systems globally may lead to more inequality. Mnuchin responded to concerns that tax reform may widen the income gap by stating that the reductions in the highest tax rates will be offset by reductions in deductions and that the bulk of corporate taxes are passed on to workers. Read more...
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Brady and Roskam Announce Hearing on Tax Reform

Ways and Means Chairman Kevin Brady and Tax Policy Subcommittee Chairman Peter Roskam have announced that the first hearing on tax reform, focusing on policies to benefit economic growth and job creation, will be held on Thursday, May 18 at 10 a.m. Chairman Brady indicated that tax reform legislation could be introduced in June. Hearing on How Tax Reform Will Grow Our Economy and Create Jobs US House Tax Committee Sets First Hearing on Tax Reform
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