Posts Tagged ‘Senate Finance Committee’

Obama health mandate now target of GOP in big tax bil

November 15, 2017

The Associated Press

WASHINGTON (AP) — The Obama health care law’s requirement that Americans get insurance coverage is now pinned as a target of Republican lawmakers, as they look to end the individual mandate to help pay for deep cuts in their tax legislation.

Senate Republicans showed Tuesday they’re intent on scrapping the Affordable Care Act’s insurance mandate, and the idea was endorsed by scores of GOP lawmakers in the House.

Sen. Orrin Hatch, chairman of the Finance Committee, confirmed late Tuesday he was revising the bill to include repeal of the insurance mandate “to help provide additional relief to low- and middle-income families.”

The surprise renewal of the failed effort to eliminate the health care law’s mandate came a day after President Donald Trump renewed pressure on Republican lawmakers to include the repeal in their sweeping legislation to revamp the tax system. It carries high political stakes for Trump, who lacks a major legislative achievement after nearly 10 months in office.

The move by Republicans on the Senate Finance Committee upended the debate over the tax measure just as it was inching closer to passage following months of fine-tuning and compromise. It turned the debate into an angry partisan referendum on health care and President Barack Obama’s signature law, the Affordable Care Act.

House Speaker Paul Ryan joined a growing chorus of Washington Republicans calling upon Roy Moore to drop out of his embattled race for the U.S. Senate. Ryan also projected confidence about delivering on an overhaul of the nation’s tax code. (Nov. 14)

The Finance panel digs into a third day of work on the Senate tax bill on Wednesday. The completed House tax bill, pointed toward a vote in that chamber Thursday, does not currently include repeal of the health insurance mandate. Trump plans an in-person appeal to House Republicans before the vote.

Promoted as needed relief for the middle class, the House and Senate tax overhaul bills would deeply cut corporate rates, double the standard deduction used by most Americans and limit or repeal completely the federal deduction for state and local property, income and sales taxes. Republican leaders deem passage of the first major tax overhaul in 30 years as imperative for the GOP to preserve its majorities in next year’s elections.

Republican efforts to dismantle the health care law collapsed this past summer as moderate Republicans joined with Democrats in rejecting the repeal — a bitter disappointment for Trump, who lashed out at the Senate GOP for failing. Adding the repeal of the mandate to the tax measure would combine two of Trump’s legislative priorities.

Beyond Trump’s prodding, the repeal move was dictated by the Republicans’ need to find revenue sources for the massive tax-cut bill, which calls for steep reductions in the corporate tax rate and elimination of some popular tax breaks.

The “Obamacare” mandate requires most people to buy health insurance coverage or face a fine. Without being forced to get coverage, fewer people would sign up for Medicaid or buy federally subsidized private insurance. Eliminating the mandate in the tax legislation would save an estimated $338 billion over a decade, which could be used to help pay for the deep cuts.

The Congressional Budget Office has estimated that repealing the requirement that people buy health coverage would mean 4 million additional uninsured people by 2019 and 13 million more by 2027.

It “will cause millions to lose their health care,” Sen. Ron Wyden of Oregon, the senior Democrat on the Finance Committee.

Feeling ambushed without advance notice, minority Democrats warned that with fewer healthy people in the insurance risk pool, the price of premiums would rise.

“Rather than learning the lessons from their failure to repeal health care, Republicans are doubling down on the same partisan strategy that would throw our health care system into chaos,” said Senate Democratic leader Chuck Schumer. “If the American people weren’t already outraged by this bill, injecting health care into it will certainly do the trick.”

To win over moderate Senate Republicans to the tax legislation, the Senate may take up at the same time a bipartisan compromise to shore up health care subsidies, Sen. John Thune, R-S.D., indicated Tuesday. Thune is a member of the Finance panel.

Hatch’s revised version of the tax bill would double the child tax credit to $2,000 from the current $1,000 — a change that presidential daughter Ivanka Trump has pushed for. The credit would rise to $1,600 under the House bill.

Also, Hatch’s revision makes slight reductions in individual tax rates for three moderate income brackets, numbers three, four and five of a total seven. The rates are reduced from the original Senate bill and the current system. The new rates are 10, 12, 22.5, 25, 32.5, 35 and 38.5 percent. The House bill shrinks the current seven brackets to four: 12, 25, 35 and 39.6 percent.

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Associated Press writers Kevin Freking, Andrew Taylor and Ricardo Alonso-Zaldivar in Washington contributed to this report.

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Senate GOP Adds Health-Care Twist to Tax Overhaul Plan

November 15, 2017

Republicans add provision repealing health-law insurance mandate

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Senate Majority Leader Mitch McConnell, R-Ky., and Sen. John Thune, R-S.D., at a news conference on Tuesday where they announced that the individual mandate to have health insurance would be repealed in the Senate GOP tax bill.   J. Scott Applewhite/AP

Senate Republicans attached a provision to their tax overhaul that would repeal the requirement that all Americans have health insurance, a new twist in the GOP lawmakers’ efforts to rewrite much of the U.S. tax code.

The insurance mandate is a centerpiece of the 2010 Affordable Care Act, also known as Obamacare. Repealing it is a long-sought goal of Republicans, who see it as onerous. Moreover, eliminating the mandate could free up federal tax revenue because it would mean fewer households buying insurance and thus fewer applying for federal health-care subsidies or for Medicaid.

Republicans plan to use the money freed up by repealing the mandate to direct tax cuts to middle-income households. They want to increase their proposed $1,650 child tax credit to $2,000 per child and lower the tax rates in three brackets, dropping the proposed 22.5%, 25% and 32.5% rates to 22%, 24% and 32%, respectively, according to the proposal, released Tuesday night by the Senate Finance Committee.

Those alterations, which the committee will debate Wednesday, will help Republicans show more tangible benefits to families, and the bigger child credit was a priority for some GOP senators.

Under the changes announced late Tuesday, almost all of the individual tax cuts and the tax cuts for pass-through businesses would expire at the end of 2025.

That would help Republicans follow the fast-track process they are using, which lets them pass a bill without needing Democratic votes but prevents them from adding to projected budget deficits after 2027. However it opens them to Democratic arguments that they are prioritizing corporations’ permanent cuts over individuals. And Democrats will likely be able to point to significant tax increases for individuals in 2027

The updated version of the tax bill also would make more businesses eligible for a new special deduction, double a deduction for teachers’ out-of-pocket expenses and create a tax credit for businesses that offer paid family leave.

Including the health-policy change adds a new layer of complexity to an already labyrinthine tax debate. Republicans have been speeding ahead, powered by a political imperative to reach a big economic-policy goal. So far, in their effort to overhaul the tax code, they have made progress in overcoming internal frictions over deficits, taxes on the wealthy, state and local deductions, child tax credits and business taxation. But they haven’t solved all those challenges yet, and Tuesday’s move adds health care to that list.

Senate Majority Leader Mitch McConnell said Tuesday that he was confident in the tax bill’s chances. He contrasted it with the effort to repeal the ACA outright earlier this year. “Every meeting I had on health care was like a trip to get a root canal,” he said at The Wall Street Journal’s CEO Council. “Nobody wanted to be there.”

A federal analysis showed repealing the mandate would increase by 13 million the number of people without health insurance by 2027 and increase premiums. It also complicates the economics of health coverage by shrinking the pool of healthy and younger people who are insured, making it harder to pay for those who end up with big health expenses. All that could spook moderate Republicans who balked at earlier attempts to repeal the ACA because it would raise the number of uninsured.

The repeal, though, would lower the federal deficit an estimated $318 billion over a decade. Moreover, Republican lawmakers have been pressed by President Donald Trump to knock down the mandate, a requirement that conservatives see as onerous and which the president could weaken through executive action even if GOP lawmakers don’t act.

Republican aides cautioned Tuesday that they couldn’t guarantee there were enough votes to pass a tax bill with the health-care provision attached. The Finance Committee aims to finish the bill this week, setting up a vote by the full Senate after Thanksgiving.

Democrats panned the move and pointed to Republicans’ insistence on cutting the corporate tax rate to 20%. “The tax bill is going to hit the American people with a health-care double whammy,” said Sen. Ron Wyden (D., Ore.), warning that millions of people would lose their health insurance or pay higher premiums.

House Republicans, who aim to pass their own version of a tax plan Thursday, began the day wary of moving too fast on taxes on their own. Among their worries was that Mr. Trump might criticize their effort, as he did during the health-care fight earlier this year. They also worried about whether Senate Republicans would be able to follow through and pass tax legislation, avoiding a repeat of the tensions that doomed their health-care bill earlier this year.

“We just want to know if we’re headed for the same rocks for being the first kid to go to the blackboard to try to spell the word,” said Rep. Mark Amodei (R., Nev.), who has told House Republican leaders that he is still undecided. “After the experience with health care, when we were first to go, it’s not that our product was perfect but it was like, you get absolutely shredded by the folks on the other side of the building, and even some of the president’s comments.”

Still, House leaders said they were confident they would limit defections and pass their own tax bill, which doesn’t address the individual mandate.

House Speaker Paul Ryan (R., Wis.) indicated Tuesday evening that the House would wait to see if the Senate can pass a tax bill that repeals the individual mandate.

“We didn’t want to complicate tax reform and make it harder than it otherwise would be,” Mr. Ryan said at a Fox News town-hall meeting on taxes Tuesday evening.

Differences between the House and Senate plan will need to be reconciled in a conference committee if both bills pass.

“I want to support a good tax reform bill in one form or the other here. So I think it’s important we keep the House bill moving,” said Rep. Doug LaMalfa (R., Calif.), who said the tougher vote will be on the final product of a House-Senate agreement. “That’s where the rubber meets the road.”

Other differences between the House and Senate linger. For example, the House bill preserves a $10,000 deduction for property taxes; the Senate bill would repeal that, along with deductions for state and local income and sales taxes. Republican lawmakers had been debating for weeks whether to attach the individual mandate repeal to the tax bill, which lowers corporate tax rates, removes deductions and repeals the alternative minimum tax.

GOP lawmakers said repealing the mandate would mean fast relief to people who don’t get subsidies on the individual market, who otherwise might have to pay the significant premium increases next year.

But the aftereffects could haunt Republicans, and they involve the same concerns that prevented the Senate from passing a health bill. Health analysts warn that knocking down the insurance requirement would roil the individual markets. Average premiums for people who buy private insurance would rise by about 10% in most years of the coming decade, according to an estimate by the nonpartisan Congressional Budget Office.

Republicans pitch it as a tax cut, saying the savings generated by the mandate’s repeal will go to lower taxes for middle-income households. “If we’re talking about doing the right thing for the middle class, we’re talking about doing the right thing for hardworking Americans, here’s a good place to start cutting their taxes,” said Sen. Tim Scott (R., S.C.).

Focus in the Senate will now turn to Republicans who may be hesitant to vote for a package that raises the number of people without health coverage.

GOP Sens. Susan Collins of Maine and John McCain of Arizona haven’t indicated they would oppose the tax bill over the individual mandate. Both voted against the final Senate effort to dismantle the ACA in late July, along with Sen. Lisa Murkowski (R., Alaska). “My concern is that if we combine the health-care issues with tax reform, we make it far more controversial,” Ms. Collins told reporters Tuesday.

Mr. McCain said he needed to evaluate repealing the individual mandate as part of the broader tax bill.

Write to Stephanie Armour at stephanie.armour@wsj.com and Richard Rubin at richard.rubin@wsj.com

 https://www.wsj.com/articles/senate-gop-adds-health-care-twist-to-tax-overhaul-plan-1510710204

House may vote on its bill as soon as Thursday; Senate continues hammering out the details

November 14, 2017
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Hank Greenberg on U.S. Tax Reform, Corporate Tax
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The Senate tax-writing committee continues hammering out the details of its tax cut proposal on Tuesday, while the House may vote on its bill as soon as Thursday. Here are the latest developments, updated throughout the day:

Byrd Rule Rattles Senate As House Nears Vote

The House’s chief tax writer says he’s confident its tax bill will pass, but a major challenge continues to loom over Senate Republicans — the Byrd Rule, an arcane measure that says the final bill can’t add to the federal deficit after its first decade in place if lawmakers want to pass it with a simple majority.

The Senate Finance Committee is set to start debating the GOP tax proposal, which is estimated to cost $217 billion in the 10th year, with more red ink in subsequent years. That means there would have to be significant changes to avoid long-term deficits. Orrin Hatch, the panel’s chairman, acknowledged on Monday there’s still work to do. He’s expected to release a modified chairman’s mark on Tuesday that may aim for better numbers.

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Orrin Hatch

But how the revised version would bridge the gap remains a mystery.

Even Hatch seems unsure: “I know what’s in it but they may change it on me,” he said after his committee recessed Monday evening.

Senator Susan Collins of Maine offered some ideas for changes late Monday. They included setting the corporate rate at 21 percent, not 20, and keeping the current top individual rate of 39.6 percent for married taxpayers filing jointly who earn $1 million or more. The Senate bill proposes cutting that rate to 38.5 percent. The proceeds from those adjustments could go to providing a refundable childcare tax credit or preserving property tax deductions, according to Collins, who cast a pivotal vote to block an Obamacare repeal bill earlier this year.

The Senate proposal would limit its revenue losses in part by delaying a cut to the corporate rate — to 20 percent from 35 percent — until 2019, a year later than the House has proposed. It would also fully repeal all state and local tax deductions. The House wants to retain a break for state and local property taxes, capped at $10,000.

Across the Capitol, House Republicans were upbeat Monday night. Matt Gaetz, a Florida Republican who previously criticized the secret drafting of the bill, praised the way House leaders had educated members about the legislation and said he expects it to pass this week.

“After the cataclysmic stumble on health care I think people really are looking for a way to get to yes on taxes,” Gaetz said in an interview.

The Republican whip team reported that the tally for the tax bill was in a good place on Monday night, according to two House members briefed on the vote counting who were not authorized to speak publicly. Conservatives are mostly on board, and the focus is now on convincing members from high-tax states that the compromise to preserve the deduction for state and local property taxes will be included in the final bill, the two Republicans said.

The House has an easier task though, since it isn’t bound by the Byrd restriction on long-term deficits. As far as Ways and Means Chairman Kevin Brady is concerned, the ball is in the Senate’s court to find a solution.

“I assume the Senate will address it in their process,” Brady told reporters Monday. “At the end of the day the final bill has to comply with those Byrd Rules.”

House and Senate tax writers have been more concerned with meeting the first requirement of the Byrd rule — that the bill stay within the amount allotted in Congress’s 2018 budget resolution: $1.5 trillion. Each version just squeaks by — the House tax bill is estimated to add $1.44 trillion to the deficit, while the Senate proposal would add $1.496 trillion.

“We really haven’t analyzed it in the second decade,” Brady said.

If the Senate is able to fix its Byrd problem and approves tax legislation, the House and Senate versions will have to be reconciled in a conference committee. So eventually, Brady will have to deal with the long-term deficit issue and make sure his members support the potentially painful compromises that would stem the bill’s red ink. — Sahil Kapur, Anna Edgerton, Erik Wasson and Steven T. Dennis

What to Watch on Tuesday:

  • The Senate Finance Committee will begin its markup at 9 a.m. Hatch is expected to introduce his modified chairman’s mark, which could include amendments that have strong support among committee members.
  • Potential amendments related to the treatment of carried interest, retirement savings, corporate integration and state and local tax deductions could be introduced.
  • House vote count results may emerge along with any minor revisions to the House tax bill. Brady said Monday afternoon he’s confident the chamber has enough Republican votes to pass its tax legislation this week.

Here’s What Happened on Monday:

  • Opening statements from Senate Finance committee members, including Senator Ron Wyden, the panel’s top Democrat, who blasted GOP leaders’ process of crafting the bill as a partisan “farce” and labeled their statements about its benefits — including higher wages — as “trickle-down fantasy math.”
  • President Donald Trump repeated his call for Congress to repeal the Obamacare law’s requirement that individuals purchase health insurance — and said the resulting savings could help offset a rate cut for top earners.
  • The Congressional Budget Office said the Senate bill would increase the federal deficit over 10 years by $1.7 trillion, including increased debt service but not any macroeconomic effects from the legislation.
  • A nonprofit group that spent more than $18 million to defeat Hillary Clinton in 2016 is turning its sights to Republican House members in high-tax states, including New York and New Jersey, saying it will be “counting on” them to support GOP tax legislation.
  • For a full account of the day, click here.

— With assistance by Sahil Kapur, Anna Edgerton, Erik Wasson, and Steven T. Dennis

https://www.bloomberg.com/news/articles/2017-11-14/byrd-rule-rattles-senate-as-house-nears-vote-tax-debate-update

The 30 Republicans Holding Up Tax Reform

September 14, 2017

The Freedom Caucus threatens to side with Democrats and block the GOP majority.

By Karl Rove
The Wall Street Journal
Sept. 13, 2017 6:53 p.m. ET

No matter how persuasive President Trump is, it’s unlikely he can round up enough Democrats to get 60 votes in the Senate for tax reform. That means Republicans will need to use the Senate’s reconciliation process, which avoids the filibuster, to pass their plan with 51 votes. But first the House and Senate must pass a budget resolution—and soon.

A budget resolution sets spending levels and authorizes congressional committees to prepare bills fulfilling the blueprint. With the reconciliation plan in mind, this year’s resolution would set the size of the tax reform and then instruct the House Ways and Means Committee and the Senate Finance Committee to flesh out the provisions.

Gaining agreement on a budget resolution is always tough. No more than a handful of lawmakers from the opposition party ever vote for the majority’s resolution. It helps that Republicans control both the House and Senate, but the GOP must still resolve its internal philosophical disagreements.

House Republicans tend to insist on resolutions that balance the budget within 10 years. This means resolutions that pledge to slow substantially the growth of entitlement spending. Such promises are rarely fulfilled. But putting them in the budget blueprint fuels Democratic ads claiming Republicans will throw grandma off the cliff and deprive poor children of free school lunches. Knowing this, Senate Republicans tend to want resolutions that reach balance after 10 years. Another GOP tension is between defense hawks, who want increased military spending, and deficit hawks, who want all spending restrained or cut.

Then there are nerdy but important technical arguments, starting with how the resolution’s spending baseline is calculated. Beginning with a baseline of “current law” means assuming that a tax break currently authorized for only a year or two will actually expire instead of being reauthorized. But Congress renews some tax breaks annually and probably will keep doing so through the next decade. To account for this, many in the GOP want to calculate the baseline under “current policy.”

It sounds technical, but it quickly becomes political. Democrats demand “current law” because a higher baseline would make tax reform appear to raise the deficit more than it actually would. On the other hand a lower baseline would give tax reform more wiggle room: One GOP budget expert tells me that “current policy” would provide, on paper, $450 billion that could be used to lower rates and make the tax code simpler and fairer.

Dynamic scoring is another geeky fight. A tax reform that generates economic growth will offset some of the government revenue lost from cutting rates. Republicans want their bill evaluated with dynamic scoring because it takes this effect into account and makes reform more attractive. Democrats oppose it for the same reason.

Still, given time and leadership—both on Capitol Hill and from the White House—Republicans could cobble together a budget resolution setting up a strong tax reform, which in turn would juice the economy and redeem the GOP in the midterms.

The biggest obstacle is the House Freedom Caucus. This group of just over 30 Republican congressmen has already slowed up the process by threatening to vote with Democrats against the GOP budget resolution unless they can see and approve, in advance, every major provision of the tax-reform bill. The Freedom Caucus tried in late July to block the House Budget Committee’s passage of a resolution unless the border-adjustment tax was taken off the table—which it then was. Now the Freedom Caucus’s members say they’ll flake on the budget resolution if tax reform includes full, immediate expensing of business investment. But if that’s agreed to, they’ll have more demands.

These lawmakers say they want Congress to operate in “regular order,” with committees grinding away to write legislation instead of leadership handing it down. This is hypocritical bunk. What they want is for their caucus to dictate the details of tax bills to the House Ways and Means Committee, the Senate Finance Committee and the Republican majorities on both sides of Capitol Hill. Their approach is to make demands while threatening to join Nancy Pelosi in opposing the budget resolution unless they get their way.

If the Freedom Caucus acts on its threat, the budget resolution could be voted down, making tax reform impossible. No doubt, following their M.O., the group’s members would then blame the GOP leadership. Even if the resolution passes, the Freedom Caucus’s shenanigans may delay tax reform until 2018. These lawmakers are demonstrating once again that the freedom they most prize is freedom from the responsibility of governing.

Mr. Rove helped organize the political-action committee American Crossroads and is the author of “The Triumph of William McKinley ” (Simon & Schuster, 2015).

Appeared in the September 14, 2017, print edition.

https://www.wsj.com/articles/the-30-republicans-holding-up-tax-reform-1505343197

Mnuchin Defends Investments, Qualifications in Senate Hearing — Treasury nominee struggles to explain his ethical lapse

January 20, 2017

Trump’s pick for Treasury faces scrutiny of Democrats, hews to GOP line on some issues

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Donald Trump’s nominee for Treasury secretary, Steven Mnuchin, took questions on how a Trump administration would, or would not, follow precedent in discussing monetary policy. Photo: AP

Updated Jan. 19, 2017 11:52 p.m. ET

WASHINGTON—Donald Trump’s pick for Treasury secretary, Steven Mnuchin, brushed aside a drumbeat of criticism from Democrats over his qualifications and investment holdings Thursday and sought to reassure lawmakers on a range of issues he would face as part of the Trump administration.

Mr. Mnuchin adopted several positions that sounded closer to the outgoing administration, including urging Congress to quickly raise the nation’s borrowing limit after a current suspension of the ceiling expires in March. He reaffirmed the..

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Trump’s Treasury secretary pick claims the Obama administration unemployment rate is ‘not real’ — “The average American worker has gone nowhere.”

January 20, 2017

“The average American worker has gone nowhere,” Mnuchin said in his confirmation hearing.

Treasury Secretary-designate Steven Mnuchin testifies on Capitol Hill in Washington, Thursday, Jan. 19, 2017, at his confirmation hearing before the Senate Finance Committee. CREDIT: AP Photo/J. Scott Applewhite

Steve Mnuchin, Trump’s nominee for Treasury Secretary, claimed during his confirmation hearing on Thursday that the unemployment rate is “not real” and that “the average American worker has gone nowhere.”

In response to a line of questioning by Sen. Maria Cantwell (D-WA) about what he would do to protect voters from another recession, Mnuchin claimed that he has traveled with the president and understands why Trump was elected.

“The unemployment rate is not real,” he said. “The average American worker has gone nowhere, and president-elect is committed, as am I, as his economic adviser, to work for the American people and grow the American economy so that the average American worker does better.”

On the campaign trail, Trump also repeatedly claimed that the unemployment rate is a “phony number,” and that the real rate could actually be close to 42 percent.

But Mnuchin, a former Goldman Sachs banker and the co-founder of a major lending bank, should know better. Calculated by the Bureau of Labor Statistics (BLS), the unemployment rate is the percentage of the total labor force that is unemployed but actively seeking employment. The number is a critical indicator of how the economy is doing and is widely used by economists. The number is respected by both Democrats and Republicans as a valid indicator of job growth. The BLS has calculated the rate the same way since the 1940s, and its methods do not change from one administration to the next.

The rate has also fallen by more than one-third since President Obama took office, dropping last month to just 4.6 percent — the lowest level since August 2007.

Despite the (real) numbers, a recent poll found that 53 percent of Republicans believe that the unemployment rate has risen under Obama. More than a third of all Americans think its worse now than when Obama took office.

Some believe that there’s a better measure to track unemployment. That statistic, called the U-6, tracks everyone who is out of work, people not looking but who want work, and those unable to find full-time employment. That number is higher — currently it hovers over 9 percent. But Mnuchin made no mention of this statistic being a better indicator of job growth, and it’s not clear he would give any credence to any labor statistic as Treasury Secretary.

https://thinkprogress.org/mnuchin-unemployment-rate-a9ad16fd3b7b#.syrpr0dbr

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Mnuchin Defends Investments, Qualifications in Senate Hearing — “I would love to work with the IRS to close these tax issues”

January 20, 2017

Trump’s pick for Treasury faces scrutiny of Democrats, hews to GOP line on some issues

Donald Trump’s nominee for Treasury secretary, Steven Mnuchin, took questions on how a Trump administration would, or would not, follow precedent in discussing monetary policy.

Updated Jan. 19, 2017 11:52 p.m. ET

WASHINGTON—Donald Trump’s pick for Treasury secretary, Steven Mnuchin, brushed aside a drumbeat of criticism from Democrats over his qualifications and investment holdings Thursday and sought to reassure lawmakers on a range of issues he would face as part of the Trump administration.

Mr. Mnuchin adopted several positions that sounded closer to the outgoing administration, including urging Congress to quickly raise the nation’s borrowing limit after a current suspension of the ceiling expires in March. He reaffirmed the…

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IRS ‘Delinquent’ in Unfair Scrutiny of Conservative Groups — Senate Report

August 6, 2015

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Republicans and Democrats disagree on whether there was political motivation

Former IRS official Lois Lerner on Capitol Hill in March 2014 during a House committee hearing.
Former IRS official Lois Lerner on Capitol Hill in March 2014 during a House committee hearing. PHOTO: LAUREN VICTORIA BURKE/ASSOCIATED PRESS

Lawmakers Fume Over Lost Emails in IRS Probe

June 14, 2014
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WASHINGTON June 13, 2014 (AP)

America Must Stop Driving Companies Out of The U.S. — Comprehensive tax reform necessary more than ever, ensuring that the U.S. is on a long-term path to sustained economic growth

May 10, 2014

By Ron Wyden
The Wall Street Journal

Cutting corporate taxes to 24% would be a good start. So would closing loopholes that encourage moving overseas.

In pursuit of lower tax rates, American multinationals are merging with smaller foreign companies and moving their headquarters overseas. About 50 U.S. companies have leveraged this “inversion” tactic in the past 30 years—and more than 20 have done so in the past two years. And just recently we have seen Pfizer make a bid for AstraZeneca that would move its tax domicile to the United Kingdom.

While they may not be breaking U.S. laws, many of these companies are navigating a loophole in America’s broken and dysfunctional tax code. And while their shareholders may secure a temporary win, workers, taxpayers and this country all lose. America’s tax base erodes at a cost of hundreds of millions of dollars in revenue, increasing the burden on other companies and individuals. America also loses good jobs, talent, investment, and the ability to compete on a global stage.

Legal or not, this loophole must be plugged. Current law requires that U.S. companies reincorporating overseas must ensure that at least 20% of their stock is owned by their new, foreign partner. As chairman of the Senate Finance Committee, I am committed to raising this floor to at least 50% for all inversions taking place from May 8, 2014, on. I don’t approach retroactivity in legislation lightly, but corporations must understand that they won’t profit from abandoning the U.S.

It would be easy to point a finger at these runaway corporations alone and simply question their morality or patriotism, but that would be ignoring our own failure to bring the tax code into the 21st century. An uncompetitive tax code strains our economy, and we should not be surprised when corporations fight to get out from under antiquated tax rules.

Congress has a responsibility to reverse the tide—now.

Comprehensive tax reform will entice leading companies to invest further in the U.S. and reduce the ability, as well as the need, to manipulate the system. I’m committed to making this happen and including changes in the inversion rules as part of a tax overhaul. Tax reform is a heavy lift and won’t be done overnight, but it has been done before and it can be done again.

 

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Getty Images

The U.S. is stuck with a 35% corporate tax rate—one of the highest in the world—and a painfully complicated and outdated tax code. Few companies pay the full 35%, but some come close and others pay next to nothing. Effective tax rates vary wildly by industry; the entire system flunks the fairness test.

The last overhaul of the U.S. tax code was in 1986. Meanwhile, other countries have modernized their tax policies to encourage investment, and today the average corporate tax rate among the 34 member countries of the Organization for Economic Cooperation and Development has fallen to 25%.

A corporate tax rate that creates a favorable investment climate and reduces the incentive to game the system is critical to successful reform. The bipartisan tax-reform bill I introduced in the Senate with Republican Judd Gregg in 2010, and reintroduced with Republican Dan Coats and Democrat Mark Begich in the last Congress called for a single flat corporate rate of 24%. Where the rate ends up depends almost entirely on the American business community’s willingness to pitch in by closing loopholes. I continue to believe that reducing the current corporate tax rate by approximately one-third will bring the U.S. in line with other developed countries that long ago recognized the need to evolve their policies to compete globally while growing their domestic economies.

The window of opportunity to enact comprehensive tax reform that both the business community and individual taxpayers desperately need is short. Recognizing the unique dynamics that come with a presidential election, there is just over a year to get the job done. But with the cooperation of my colleagues on both sides of the aisle, we can.

Over the next few months, I will be working closely with members of the Senate Finance Committee to delve into the areas necessary for modernizing our tax code. That includes taking a serious look at addressing the growing and emergent challenge of our international tax regime.

While there are many varying viewpoints and approaches to this pressing issue, members of Congress share a common goal of ensuring that the U.S. is on a long-term path to sustained economic growth. House Ways and Means Committee Chairman Dave Camp and former Senate Finance Chairman Max Baucus have played important roles in building a solid foundation for tax reform. Now is the time for us to build on their work and move the country forward.

Mr. Wyden, from Oregon, is chairman of the Senate Finance Committee.