Bipartisan Policy Center Event on Tax ReformEssay Preview: Bipartisan Policy Center Event on Tax ReformReport this essayBIPARTISAN POLICY CENTER EVENT ON TAX REFORMMAY 24, 2016OverviewOn May 24, the Bipartisan Policy Center hosted a discussion with Reps. Devin Nunes (R-CA) and Richard Neal (D-MA) entitled, “Tax Reform in 2017: A Bipartisan Pathway.” The event was moderated by former Rep. Earl Pomeroy (D-ND), co-chair of the Bipartisan Policy Center’s (BPC) Tax Initiative.
The event began with opening remarks from Michelle Stockwell, BPC’s vice president of public policy, who spoke about the need to make US business tax code more competitive. She acknowledged the difficulty of pushing tax reform through in the current Congress and “lame duck” administration, consequently stating that the focus is on the next Congress to pass tax reform.
During the discussion, Reps. Nunes and Neal expressed three main challenges to tax reform: partisan ideology; businesses’ capabilities and willingness to restructure their operating models; and whether there is motivation in the White House to advocate for tax reform.
SummaryRep. Nunes’ RemarksRep. Nunes used his remarks largely to advocate for the American Business Competitiveness (ABC) Act, which he introduced in January. He tied in his role as chairman of the House Intelligence Committee by saying that national security is reliant on economic growth. He argued that the US must achieve at least four percent, or else the country would be in a “bad situation.” He said this level of growth can only be reached if businesses increase investments, and noted that the ABC Act encourages investment by allowing 100 percent expensing. Rep. Nunes cautioned the tax could only work if business, especially big businesses, were able to both adapt their business models to the tax and were willing to enact such restructuring.
Rep. Nunes was asked about the potential upfront loss in tax revenue caused by the ABC Act. Rep. Nunes responded that in a static scoring model, such loss would be expected. However, he said that static scoring is a mistake, and that a dynamic scoring model would be more appropriate. Rep. Nunes stated that there will be great surges of money into the economy that tax revenue loss will not be a problem. He acknowledged that one of the dangers of the ABC Act is that it could “melt the economy quickly.” However, he felt that Congress could control inflation caused by economic growth. He concluded by reiterating that his tax reform plan would spur the economic growth necessary for domestic
The Budget and Tax Reform Committee met on Tuesday to make a number of technical requests, including a House Budget Committee hearing on the budgetary impact of the ABC Act’s tax overhaul, a Senate hearing on the budgetary impact of the ABC Act’s overhaul, and a House Ways and Means Committee hearing on the budget impact of the ABC Act’s repeal. The House Budget Committee took up the budget resolution on Thursday, which focuses on reconciliation costs, a Senate hearing on the economic impact of the ABC Act, and a House Ways and Means Committee hearing on the economics of the ABC Act. The budget resolution also sought the House Republican caucus’s support for the $11 billion of funding that the House is expected to allow on the ABC Act. The budget, however, did not include any funding for the Budget Committee to meet the fiscal year that begins on Sept. 30.
Rep. Pete Sessions (R-Texas), the top Republican on the Budget Committee.
In an open letter to President Trump, House members from six conservative groups called on Sen. Ron Johnson, R-Wis., to reject the Abbott Budget, saying the ABC Act “would cause massive deficits and would be in the best interests of our national security, our economy, and American citizens, all of whom might rely on the power of individual taxpayer dollars to fund basic services.” “If we do not act quickly to avert the threat of a catastrophic economic meltdown, we risk damaging the American economy even more than many believe,” said Rep. Pete Swallow, R-N.Y. “Our constituents do not need to wait for these bills to become laws and that’s certainly not going to change without direct political participation from both House members and the rest of the Republican conference.”
Rep. Jason Chaffetz (R-Utah), the chairman of the House Oversight and Government Reform Committee, said on Wednesday that the Committee is now considering a separate proposal that would “impose an excise tax for the sale of some item on the Internet. We won’t leave this in the hands of Congress.”
The Congressional Budget Office cited a report from the nonpartisan Center for Budget and Policy Priorities that stated that the ABC Act would “run up against” the economic recovery as a result of the “cost overruns” and increases in the U.S. budget deficit. It cited a study by the Brookings Institution that found that the average American family spends $3,000 more every month than they did two decades ago. “With this law, and if passed by the House before July 1, 2017, many economists now predict that our average savings account will collapse in the long run,” BPI said. “The Congressional Budget Office also points to the strong downward trend in the economy, and estimated that