Tax Notes: Brady Wants Discussions About 20 Percent Corporate Tax Rate

News Article

by David van den Berg

House taxwriters should identify and evaluate the trade-offs needed to reach a corporate rate of no more than 20 percent as they work to update the House Ways and Means Committee tax reform discussion draft released in February, Ways and Means member Kevin Brady, R-Texas, said November 4.

"My hope is that we move forward with version 2.0 on this tax draft," said Brady, who is campaigning to be the next Ways and Means Committee chair, replacing Rep. Dave Camp, R-Mich.

Speaking at the Tax Executives Institute conference in Houston, Brady said that as he makes progress on tax reform, "perhaps achieving a lower corporate rate, no more than 20 percent," he wants to have discussions within the committee as well as with other House members and stakeholders to identify the trade-offs necessary to achieve the lower rate.

The Camp draft calls for a flat corporate rate of 25 percent phased in over five years.

Brady called Camp's plan a vital and irreversible first step, but said much work still remains to deliver tax reform. He wants to generate public support and House approval, and position tax reform for future Senate action. It's important that both chambers "advance their vision" of tax reform, but the Senate has a lot of work to do, he said. And while any tax reform signed into law in the next two to six years will be bipartisan, what happens in the Senate depends to a great extent on midterm election results, Brady said.

"There is no question in my mind that a Republican-held Senate enhances the likelihood of a Senate tax draft in this next session," Brady said. "We're in the sixth inning of a 30-inning baseball game."

While Brady discussed corporate rates, he also said cost recovery is vital to economic growth and may be as important as rates. Those two priorities may prove difficult to reconcile. Camp's draft slowed depreciation schedules as a way to pay for lower rates.

Brady highlighted dynamic scoring as a key step in bridging the partisan disagreement over whether tax reform should raise revenue. "Dynamic scoring, not just for revenue but for who pays taxes, I think is critical for tax reform," he said. "I'm convinced if we fix this code the right way we are going to grow the economy."

Asked for his position on replacing the income tax with a national sales tax, Brady said that would be his preference if he were starting from scratch because it is the strongest tax structure for growing the economy. But that would likely be too bold an idea to enact given the current state of politics in Washington, so a revised version of the Camp draft is a more logical next step, Brady said.

Lindsey McPherson contributed to this article.

Source