White House maps ‘aggressive’ timeline to pass tax bill

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(Bloomberg) White House officials outlined what one of them called an “aggressive” timetable Monday for getting a tax overhaul in place before the end of the year.

A top White House legislative aide said the plan for a tax code rewrite is to start hearings and a markup of the bill after Labor Day so a version can get through the House in October and the Senate in November. He also said a 2018 budget resolution—the first step to get a tax bill passed without Democratic support—would be agreed upon in September or October.

“So that, I think, is an aggressive schedule, but that is our timetable,” White House legislative affairs chief Marc Short said at a tax event in Washington sponsored by Americans for Prosperity, a group backed by billionaire industrialists Charles and David Koch.

National Economic Council Director Gary Cohn repeated the message, saying before a listening session with real estate industry members that the administration and congressional lawmakers were in a “heavy drive toward tax reform.” Treasury Secretary Steven Mnuchin said at the AFP event that the plan was to have a tax bill “start going through the normal process” beginning on Sept. 1.

The White House has said it wants to lower corporate and individual tax rates, eliminate deductions and simplify the code. Despite the officials’ assurances on timing, 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.

Immediate Expensing

Short said that the White House probably wouldn’t be pushing for so-called full expensing, which would allow companies to fully deduct their capital spending from income immediately instead of over years. House Speaker Paul Ryan had pushed for full expensing, along with the controversial border-adjusted tax on imports, in his tax blueprint released last June.

“The message is: It may not be perfect for everything we want, but it’s going to be really, really good for the economy and a lot better than what we have,” Mnuchin said.

A tax overhaul will require a delicate balancing act, and one that has bedeviled negotiators in the past. A major tax revamp hasn’t been passed in more than three decades, and the Trump administration is under pressure after another legislative effort—repealing and replacing the 2010 health-care legislation—has produced no results.

Short said the president plans to do more traveling to pitch a tax overhaul than he did for the health-care effort. “From a travel perspective, you’ll probably see more activity,” he said.

Few details of the planned tax code rewrite have emerged from weekly, closed-door tax meetings between Trump’s advisers and congressional leaders, leading analysts to fear that any tax-rate cuts may be shallower than many hoped. That would jeopardize Trump’s goal of spurring job creation and economic growth, and do little to prevent U.S. companies from shifting their income and tax liabilities offshore to lower-tax countries, economists say.

Negotiators have made “enormous progress” despite being “pretty far apart” when the effort to rewrite the tax code began during the transition, Cohn said Monday morning.

Still, he added: “We’ve got to get a lot done in the next three to four weeks.”

Inflated Chicken

About 50 protesters demonstrated outside the AFP event where Mnuchin and Short spoke. They were accompanied by large props including an inflated chicken sporting a hairstyle like Trump’s—a reference to the protesters’ saying the president is afraid to release his tax returns.

Trump has departed from 40 years of tradition for presidents by declining to make his returns public. He has said he’s under an audit and won’t release the documents until that review has concluded. The demonstrators held pre-printed yellow signs with slogans including “Medicaid Not Millionaires” and “No Tax Cuts For Trump.” They used bullhorns to tell stories about people who could be adversely affected by cuts in social programs if they’re used to help pay for tax changes.

Last week, White House officials and congressional leaders released a joint statement outlining their tax principles, with the only real progress disclosed being that the border-adjusted tax wouldn’t be part of negotiations going forward. That signaled a victory for retailers and other import-heavy industries and for groups backed by the Koch brothers, which opposed the measure.

The border-adjusted tax had helped Ryan and his allies propose lowering the corporate tax rate to 20 percent from the current 35 percent. Trump has called for going even lower—to 15 percent, a target that may be far harder to achieve.

Senator Orrin Hatch, chairman of the tax-writing Finance Committee, tried to temper expectations on corporate rates when talking to reporters Monday.

“The art of the doable is the threshold right now,” Hatch said. “Anywhere between 15 and 25 percent would be tremendous.”

—With assistance from Bill Allison and Terrence Dopp

Bloomberg News
Tax reform Tax code Corporate taxes Steven Mnuchin Orrin Hatch