House Ways and Means Chairman Kevin Brady (R-TX), speaking today at an event sponsored by Bloomberg BNA and KPMG LLP, said that comprehensive tax reform will happen in 2017, with the timing to be determined.
According to Brady, not since the Reagan era and the tax reform of 1986 have the same dynamics for tax reform been present—namely:
Chairman Brady pointed to the House Republicans’ “blueprint” (released in June 2016) as a starting point for tax reform, and one that would focus on economic growth (growth in both jobs and wages) and that would “leapfrog” the United States to a leadership position for those making global investments.
With the blueprint already on the table, Brady said that tax reform could move “in a major way” given the similarities to candidate Trump’s tax reform proposals—including greater incentives for investment and savings, allowing repatriation of profits currently being held overseas, and providing lower tax rates and a greatly simplified tax code. Brady also noted that President-elect Trump has talked about fixing the tax code as a top priority, early in his administration.
Brady explained that the blueprint provides for reforms in three key areas of focus:
Brady said that from a Ways and Means perspective, stakeholders are being asked for feedback and that Ways and Means has been aggressively reaching out to taxpayers for a “test drive” of the blueprint. The goal is to improve the blueprint through the end of 2016, with tax reform to follow in 2017 (the exact timing on markup has not yet been determined), he said.
In response to questions, Chairman Brady reported that he expects the following elements would be included as part of tax reform:
He did not expect repeal of the Affordable Care Act (Obamacare) would be done as part of the tax reform efforts, but would be a separate legislative action.
Chairman Brady said that he did not anticipate that “tax extenders” or tax preference items that expire in 2016 to be taken up in the “lame duck” congressional session, but that these would be treated as part of the tax reform in 2017.
When asked about the final and temporary regulations under section 385 (October 2016), Brady said that he hoped President Trump would “stop those regulations cold.” Brady said that the regulations, while revised and “better” for U.S. business, they nevertheless would be damaging to the economy because they would keep investment out of the United States. He said that at the end of the day, there is no need for an exit tax to keep companies in the United States or a wall to keep investment out of the United States.
Chairman Brady also commented on the EU “state aid” investigations, saying that this allowed other countries to “grab” tax revenue that ultimately would be returned to the United States.
© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
KPMG International Cooperative (“KPMG International”) is a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.