The recently appointed chairman of the tax-writing House Ways and Means Committee, Kevin Brady, R-Texas, described some of his tax reform priorities in a speech Friday.

Last November, Brady succeeded Paul Ryan, R-Wis., as chairman of the committee after Ryan became Speaker of the House. “Our tax reform will be based on six core principles,” he said during a keynote speech before the Tax Council Policy Institute’s 17th Annual Tax Policy & Practice Symposium in Washington, D.C. “First, the tax code must be simpler, fairer, and flatter. Today, individuals, families and small businesses must grapple with a tax code that is impossible to understand—and that has to change.

Brady believes tax reform must close loopholes, eliminate special rules and limit the deductions, exclusions and credits that riddle the tax code today in order to lower rates for everybody. “Well-advised taxpayers today use an array of complex tax provisions to minimize their taxes under the law,” he said. “But that complexity is a waste of resources that distorts investment decisions, leads to disputes with the IRS, and takes critical time and capital away from running successful businesses.”

He said businesses both large and small should have a competitive tax system, including a fair and competitive tax rate. “Small businesses, which are typically operated as S corporations, LLCs, or partnerships, deserve a tax system that encourages growth,” he said. “Small businesses should not believe that their tax rate places them at a disadvantage to large C corporations.”

Brady wants the tax code to stop encouraging the shift of jobs overseas. “Too many American businesses are being acquired by foreign corporations—or engaging in inversion transactions to avoid being a ripe target for foreign takeover,” he said. “We need a tax code that encourages businesses to locate their operations in the United States, creating jobs here at home and helping to grow our economy.”

Brady would like to institute a territorial type of tax system. "We need to replace the current world-wide tax system with a permanent modern territorial-type system that helps American companies compete and win overseas—and then easily bring earnings back home to invest in new jobs, research and growth,” he said. “No one has yet convinced me that a stranded American dollar left overseas is better than a dollar brought home for any reason.”

He believes the tax code should encourage economic growth and plans to work on tax reform this year, even though few anticipate many changes until after the elections. However, he pointed to changes in last December’s PATH Act, which made a number of traditionally temporary tax extenders into permanent parts of the tax code.

"Our work this year will ensure we are ready to address all aspects of our tax system from individual to domestic business—both small and large—to international business,” said Brady. “That means we will be very busy in 2016, soliciting bold and innovative ideas from members of Congress, from stakeholders like you, and from the American people.”

He promised several upcoming actions from the Ways and Means Committee.

"This year, our committee is leading an inclusive GOP conference-wide effort to produce a blueprint that details our consensus vision for comprehensive pro-growth tax reform,” said Brady. “This blueprint will reflect consideration of the wide range of ideas and proposals that are part of an open and robust dialogue on tax reform. We’ll bring together the best elements for the pro-growth tax policy that the U.S. economy needs and that Americans have a right to expect from their government.”

Brady also plans to draft legislation for international tax reform, especially in light of the wave of corporate tax inversions in recent years.

"At the same time, we will move forward immediately to draft international tax reform legislation,” said Brady. “Our work on international tax reform will be an integral part of our work on comprehensive tax reform. Our work here will be a down payment that clears the way to focus on the work on lowering rates and simplifying the code for all businesses and individuals, so that we are ready to enact comprehensive tax reform in 2017. We will send a clear signal to American companies and shareholders that help is on the way—  that we won’t stand idly by while our tax code drives them overseas or makes them a target for a foreign takeover.”

Brady pointed to changes ushered in by the Organization of Economic Cooperation and Development’s Base Erosion and Profit Shifting action plan, also known as OECD BEPS, which is seeking to force multinational companies to pay taxes in the countries where they operate. He is concerned about not only OECD BEPS, but also recent moves in the European Union to probe the tax arrangements of U.S. companies.

"The OECD with its Base Erosion and Profit Shifting or BEPS project is recommending new tax approaches that would disproportionately burden American global businesses,” said Brady. “Countries around the world are following the OECD’s lead and implementing aggressive new tax measures. And the European Union just announced an unprecedented plan to arm its member countries with a whole arsenal of new revenue-grabbing tax measures. Worldwide American companies are rightly concerned that the BEPS project will result in higher foreign taxes, higher compliance costs, and double taxation as the project redraws the lines of cross-border taxation. Ultimately, many of them could be forced to restructure their business operations and move U.S. activities, such as research and development, overseas. This isn’t a hypothetical; we see it happening today. And to add insult to injury, the European Union state-aid investigations are threatening to impose retroactive taxes going back ten years on American businesses. We cannot allow American taxpayers to foot the bill for increased tax collections in Europe and elsewhere.”

He asked for input from tax professionals to help inform the work of his committee. "We need you to provide your ideas about tax reform in general and about specific proposals that affect our families and our communities, our businesses small and large, and our economy overall,” he said. “I appreciate your help and thoughtful work on these important issues. The American people expect leadership and action—and that’s what they will see from the Ways and Means Committee. And, I can assure you that I am committed to making pro-growth tax reform a reality.”

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