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In a joint statement, top Trump Administration officials and congressional Republican leaders formally announced what most observers have known for months: The destination-based cash flow tax is dead.
At the same time, the group, which has been quietly negotiating a tax bill behind closed doors for weeks, laid out a broad outline of its goals for a tax bill that includes a long list of sweeteners but says nothing about how they’d be paid for. The group did not even say whether it backed a net tax cut or a bill that would raise the same amount of money as the current tax code.
The group included House Speaker Paul Ryan (R-WI), Senate Majority Leader Mitch McConnell (R-KY), Treasury Secretary Steve Mnuchin, National Economic Council Director Gary Cohn, Senate Finance Committee Chairman Orrin Hatch (R-UT), and House Ways and Means Committee Chairman Kevin Brady (R-TX).
The statement said the group’s goal is to “protect American jobs and make taxes simpler, fairer, and lower for hard-working American families.” In addition, it called for:
“a lower tax rate for small businesses so they can compete with larger ones, and lower rates for all American businesses so they can compete with foreign ones. The goal is a plan that reduces tax rates as much as possible, allows unprecedented capital expensing, places a priority on permanence, and creates a system that encourages American companies to bring back jobs and profits trapped overseas.”
However, the group said Congress should meet those goals without enacting a border adjustment tax: “While we have debated the pro-growth benefits of border adjustability, we appreciate that there are many unknowns associated with it and have decided to set this policy aside in order to advance tax reform.”
The six paragraph document was as interesting for what it did not say as for what it did.
It set no targets for either individual or business tax rates, never explicitly said that the rate on pass-through businesses such as partnerships should be the same as rates for corporations (a top Trump goal), said nothing about the fate of the corporate interest deduction, and was silent on how a tax bill would address other business and individual tax preferences.
The statement called on committee action on a tax bill “this fall” but did not set a timetable for final congressional approval. It also tendered a bit of an olive branch to Democrats, saying, “As the committees work toward this end, our hope is that our friends on the other side of the aisle will participate in this effort.”
If the document is a true representation of where talks among Republican leaders stand, it seems that they have a long way to go before they can produce any major tax legislation.
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Manuel Balce Ceneta/AP Photo