U.S. House Speaker Paul Ryan (R-WI) today addressed tax reform in what was described as his “first major speech on tax reform,” and presented at the 2017 manufacturing summit convened by the National Association of Manufacturers.
Read text of Speaker Ryan’s speech.
Speaker Ryan indicated that lawmakers would:
Speaker Ryan also indicated that “if we are going to truly fix our tax code, we have to fix all of it—both for individuals and businesses.” Among other things, he noted the large number of passthrough businesses that pay taxes as individuals. While he did not explicitly call for a “border adjustment tax,” he alluded to the House Republican “blueprint” for tax reform, stating that:
Today, U.S. companies are leaving to become foreign companies, when it should be the other way around. We want foreign companies to become U.S. companies.
We must think differently, so that once again we make things here and export them around the world. There are a number of ways to achieve this—we in the House have our own idea—and that is one of the things that we are discussing with the administration.
But the bottom line here is this: We cannot accept a system that perpetuates the drain of American businesses overseas.
In terms of the substance of business tax reform, Speaker Ryan expressed support for:
Speaker Ryan indicated that the House and the Senate currently are working with the president to turn the administration’s “core principles” for tax reform into a “transformational tax reform plan.” He also expressed optimism about achieving transformational tax reform this year, stating that:
We are going to get this done in 2017. We need to get this done in 2017.
Enacting tax reform is inherently difficult and can take time. Further, the Senate generally requires 60 votes to approve legislation, unless special “budget reconciliation” rules can be used that provide a process for passing legislation with a simple majority of the Senate. Given that there are only 52 Senate Republicans, achieving 60 votes to move tax reform through the Senate would require some Democratic support unless these budget reconciliation rules were used. Using the budget reconciliation process to pass tax reform with only Republican votes, however, may raise its own set of issues.
As just one example, the reconciliation rules include a requirement that any title of legislation generally cannot increase the federal long-term deficit in any year beyond the “budget window.” Thus, as a very general matter, if Republican leaders want to be able to pass a tax bill in the Senate with fewer than 60 votes, that legislation may need to be drafted so as to not contain a net tax cut in years outside the budget window (which, in recent years, has been 10 years but could possibly be modified to a different timeframe). Thus, using budget reconciliation to move tax reform with just Republican votes could make enacting permanent tax reform even more challenging.
© 2019 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.