(Bloomberg) Representative Ted Yoho had hoped to spend the August recess in his North Florida district making the case for a tax overhaul. Instead, the third-term Republican said he doesn’t know what to say when his constituents ask what the revamp will mean for them.
“There is no detail,” Yoho said in an interview. “It is a problem.”
The White House and GOP have indicated that tax cuts are the next legislative priority, with the aim of completing legislation before the end of the year. Last week, White House officials and congressional leaders released a statement outlining their agreed-upon tax principles. For rank-and-file GOP members like Yoho, though, the vague statement won’t be enough to help rally support for what President Donald Trump and top Republicans have said will be a once-in-a-generation rewrite of the tax code.
Yoho said he wants to be able to explain to his voters why the tax package will help them. But to do that, he said he needs details—such as what the corporate tax rate will be and whether the estate tax will be eliminated—rather than generalities like officials’ statements about simplifying the tax code so Americans will be able to file their returns on a postcard.
The one thing the tax statement from the so-called Big Six was clear about -- elimination of the controversial border-adjusted tax on imports—just adds new complications to an already intricate task as Congress begins its August recess. Despite GOP assurances on getting a tax overhaul in place before the end of 2017, many obstacles and unanswered questions remain about how to offset cutting tax rates with new revenue so the tax changes can be permanent under congressional budget rules.
‘Other Questions’
“There’s no other detail,” said Representatives Mark Meadows of North Carolina, who chairs the conservative House Freedom Caucus. Meadows said it’s hard for members to sell a tax plan to their constituents without knowing what the corporate rate will be and whether businesses will be allowed to fully deduct their capital spending from income immediately instead of over years.
The House GOP tax blueprint backed by Ryan calls for a 20 percent corporate rate, while Trump’s White House tax outline released in April sets a 15 percent rate. Ryan has also called for full and immediate expensing, while the White House has seemed cool to the idea.
“There are so many other questions,” Meadows said. “We need a lot more level of detail before you can opine on whether it’s good or bad.”
Still, some House members said they’re content with leadership’s handling of the proposed tax revamp so far. Representative Devin Nunes of California, a Ryan ally and member of the tax-writing Ways and Means Committee, said he’s “absolutely” satisfied with the Big Six’s progress. But he voiced some concerns that the death of the border-adjusted tax would make it harder to cut rates “as far as we need to get them down.”
“Right now, there’s just a lot more education that needs to occur,” Nunes said in an interview.
Health-Care Lessons
The Big Six has made headway on the broad principles, and the House and Senate tax-writing committees will now write the legislation, said AshLee Strong, a spokeswoman for Ryan.
Republican leaders and staffers on the tax committees are holding regular discussions about the road ahead, hoping to reach agreement on the details of legislation before subjecting lawmakers to difficult votes, a lawmaker and aides said.
William Gale, a tax policy expert at the nonpartisan Brookings Institution, said the lack of policy guidance may be due to the fact that the Big Six—Ryan, Ways and Means Chairman Kevin Brady, White House economic adviser Gary Cohn, Treasury Secretary Steven Mnuchin, Senate Majority Leader Mitch McConnell and Senate Finance Committee Chairman Orrin Hatch—appear to have made little progress on the specifics of a tax plan.
“Distance is a tax reform’s best friend. Once you look at it up close and see the things you have to do, people shy away from it pretty quickly,” Gale said. He cited former Ways and Means Chairman Dave Camp’s 2014 tax plan along with Ryan’s border-adjusted tax as examples of proposals that aimed to raise revenue and lost support as they received more attention.
Gale said he was doubtful that the GOP could meet its deadline of getting a tax overhaul in place by 2017. “I don’t see any sense of appreciation of how complicated it will be,” Gale said.
The administration officials and congressional leaders who make up the Big Six say they learned from the difficult experience of trying to repeal Obamacare. On taxes, they’ve been meeting to ensure that White House, House and Senate Republicans are all on the same page before releasing legislative text. But, like health care, the tax deliberations have so far been secretive, limited to a small group of party leaders who have met behind closed doors to try to find consensus.
White House budget director Mick Mulvaney on Wednesday offered a hopeful view about the process.
“The party was not necessarily united” on its approach to repealing Obamacare, Mulvaney said on Fox News. “I’m cautiously optimistic that tax reform will actually be easier than health care.”
Permanent or Temporary
In the Senate, Republicans still haven’t received guidance or presentations on a tax plan from leadership or Big Six members, according to Senator Bob Corker of Tennessee. Part of that may be because the chamber has been focused on repealing and replacing the 2010 health-care bill.
“We’ve got a lot of work to do,” said Senator David Perdue, a Georgia Republican and former businessman and active proponent of tax cuts. “I want to open the door and get involved.”
It’s also difficult for GOP members to pitch a tax rewrite to their constituents without knowing whether the changes will be permanent. Under congressional budget rules, Republicans have to come up with revenue raisers to ensure the tax cuts don’t add to the deficit, otherwise the changes will expire. So far House members seem more committed to permanence, while some Republican senators seem open to temporary changes.
“I’m willing to live with something that’s not permanent in order to get the right result,” Perdue said.
Senator Mike Rounds of South Dakota agreed that a tax package doesn’t have to be deficit-neutral.
‘35,000-Foot Level’
At their weekly lunch meeting Tuesday, Senate Republicans discussed tax overhaul plans after weeks of trying and failing to pass an Obamacare repeal bill. But it was a broad overview that didn’t delve into policy details or contentious issues, senators said after the meeting.
Senator Lindsey Graham of South Carolina said it was a “good-spirited conversation.” But he added that he wants clarity on whether or the party will evaluate the cost of its tax bill using a dynamic score that accounts for macroeconomic impacts or a traditional score that doesn’t take those effects into consideration.
Senator Shelley Moore Capito of West Virginia suggested more regular meetings on taxes so lawmakers know "what direction we’re going" in. For now, she said, “we know the parameters—we want growth and we want to create jobs.”
“It’s still kind of at the 35,000-foot level,” Capito said.
