This article is from the source 'nytimes' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at http://www.nytimes.com/2017/02/24/us/politics/tax-code-congress.html
The article has changed 4 times. There is an RSS feed of changes available.
| Version 2 | Version 3 |
|---|---|
| Did Someone Say ‘Tax Code Rewrite’? Lobbyists Scramble | Did Someone Say ‘Tax Code Rewrite’? Lobbyists Scramble |
| (about 2 hours later) | |
| WASHINGTON — The homebuilders lobby fears that an ambitious rewrite of the entire tax code will stifle the housing market. Retailers fret that it will make the cost of their imports soar. For charities and their representatives, the worry is that donations will be stunted, plaguing nonprofit groups that serve the neediest Americans. | WASHINGTON — The homebuilders lobby fears that an ambitious rewrite of the entire tax code will stifle the housing market. Retailers fret that it will make the cost of their imports soar. For charities and their representatives, the worry is that donations will be stunted, plaguing nonprofit groups that serve the neediest Americans. |
| President Trump’s new Treasury secretary, Steven T. Mnuchin, casually predicted this week that the first true overhaul of the federal tax code in three decades would happen before lawmakers head home for their August recess. But there’s a bit of a problem: That “swamp” Mr. Trump liked to talk about on the campaign trail? It’s still undrained. | President Trump’s new Treasury secretary, Steven T. Mnuchin, casually predicted this week that the first true overhaul of the federal tax code in three decades would happen before lawmakers head home for their August recess. But there’s a bit of a problem: That “swamp” Mr. Trump liked to talk about on the campaign trail? It’s still undrained. |
| And now the dwellers of that so-called swamp are mobilizing to protect their patch of the bog, with armies of corporate lobbyists scrambling to protect their favorite provisions, exceptions and deductions before it is too late. | And now the dwellers of that so-called swamp are mobilizing to protect their patch of the bog, with armies of corporate lobbyists scrambling to protect their favorite provisions, exceptions and deductions before it is too late. |
| To those who are in the trenches, talk of enacting sweeping tax legislation in the span of a few months sounds like a mix of bravado, naïveté and delusion. By definition, tax overhaul creates winners and losers on tax day, and with billions of dollars at stake, the prospect of revamping the system has already created fierce infighting among Republicans and a massing of lobbyist forces underwritten by a divided but well-heeled business community. | To those who are in the trenches, talk of enacting sweeping tax legislation in the span of a few months sounds like a mix of bravado, naïveté and delusion. By definition, tax overhaul creates winners and losers on tax day, and with billions of dollars at stake, the prospect of revamping the system has already created fierce infighting among Republicans and a massing of lobbyist forces underwritten by a divided but well-heeled business community. |
| “Tax reform is a series of battles,” said Sage Eastman, who worked in vain on tax overhaul plans as a longtime senior aide on the House Ways and Means Committee and who now lobbies for Mehlman Castagnetti Rosen & Thomas in Washington. “This is just the tip of the iceberg.” | “Tax reform is a series of battles,” said Sage Eastman, who worked in vain on tax overhaul plans as a longtime senior aide on the House Ways and Means Committee and who now lobbies for Mehlman Castagnetti Rosen & Thomas in Washington. “This is just the tip of the iceberg.” |
| The most vocal battle thus far is over the “border adjustment tax” that is the linchpin of the House Republican tax plan drafted by Speaker Paul D. Ryan and Representative Kevin Brady of Texas, the Ways and Means chairman. They have proposed a 20 percent import tax along with the elimination of taxes on exports so that, in theory, corporate tax rates could be slashed without ballooning the deficit. | |
| The plan has divided industries that have for years called for changes to the tax system, pitting retail and energy giants — which rely heavily on imports — against America’s biggest manufacturers, which hope the proposal will make their exports cheaper around the world. | The plan has divided industries that have for years called for changes to the tax system, pitting retail and energy giants — which rely heavily on imports — against America’s biggest manufacturers, which hope the proposal will make their exports cheaper around the world. |
| But the border adjustment tax is only the first fight. Tax experts are expecting a slog that could drag well into 2018 and even cast a cloud over the midterm elections. | But the border adjustment tax is only the first fight. Tax experts are expecting a slog that could drag well into 2018 and even cast a cloud over the midterm elections. |
| Many aspects of the House tax blueprint, the most specific plan floating around the capital, are already creating consternation across a swath of sectors that have learned over the years how to make do with the status quo, however cumbersome. With lawmakers working to put more concrete plans together quickly, these groups are pushing back before it is too late. | Many aspects of the House tax blueprint, the most specific plan floating around the capital, are already creating consternation across a swath of sectors that have learned over the years how to make do with the status quo, however cumbersome. With lawmakers working to put more concrete plans together quickly, these groups are pushing back before it is too late. |
| Within the real estate industry, for instance, the concern is that a proposal to nearly double the standard deduction would reduce the tax benefits of homeownership people enjoy when they itemize their returns and deduct mortgage interest from their incomes. Reducing the appeal of this benefit, the argument goes, could weaken the housing market. | Within the real estate industry, for instance, the concern is that a proposal to nearly double the standard deduction would reduce the tax benefits of homeownership people enjoy when they itemize their returns and deduct mortgage interest from their incomes. Reducing the appeal of this benefit, the argument goes, could weaken the housing market. |
| “The current plan, by raising standard deduction so high, dilutes the importance of the mortgage interest deduction,” said Gerald Howard, chief executive of the National Association of Home Builders. “It really neuters it, so we’re going to try to fix that.” | “The current plan, by raising standard deduction so high, dilutes the importance of the mortgage interest deduction,” said Gerald Howard, chief executive of the National Association of Home Builders. “It really neuters it, so we’re going to try to fix that.” |
| Charities face a similar threat. Tax rules encouraging charitable giving have been around for ages, and they allow people to lower their tax bills and do good deeds at the same time. But, as with housing, changes to the standard deduction proposed by Republicans could erase those incentives. | Charities face a similar threat. Tax rules encouraging charitable giving have been around for ages, and they allow people to lower their tax bills and do good deeds at the same time. But, as with housing, changes to the standard deduction proposed by Republicans could erase those incentives. |
| Last week, Michael Kenyon, chief executive of the National Association of Charitable Gift Planners, was part of a delegation of charities that came from around the country to Washington to alert members of Congress to their concerns. They held more than a hundred meetings in the capital, where they pressed for a solution that would preserve their special status. | Last week, Michael Kenyon, chief executive of the National Association of Charitable Gift Planners, was part of a delegation of charities that came from around the country to Washington to alert members of Congress to their concerns. They held more than a hundred meetings in the capital, where they pressed for a solution that would preserve their special status. |
| “There is real urgency about this,” Mr. Kenyon said. | “There is real urgency about this,” Mr. Kenyon said. |
| Anxiety is also high in corners of the moneyed financial world that have benefited mightily from the current system. | Anxiety is also high in corners of the moneyed financial world that have benefited mightily from the current system. |
| Private equity has for years guarded the special treatment of “carried interest,” a loophole that lets billionaire fund managers pay low capital gains tax rates instead of higher income tax rates on the fees they charge clients. Mr. Trump, taking up a call from his predecessor, Barack Obama, campaigned to end the loophole, and because Mr. Ryan’s plan is silent on the matter, it could be in jeopardy. | Private equity has for years guarded the special treatment of “carried interest,” a loophole that lets billionaire fund managers pay low capital gains tax rates instead of higher income tax rates on the fees they charge clients. Mr. Trump, taking up a call from his predecessor, Barack Obama, campaigned to end the loophole, and because Mr. Ryan’s plan is silent on the matter, it could be in jeopardy. |
| Another fear is the impact of a move away from the tax deduction for interest on corporate debt in favor of the immediate deductibility of business expenses. For private equity firms that rely heavily on borrowing to make deals, the shift could significantly alter the economics of many transactions by raising the cost of capital. | Another fear is the impact of a move away from the tax deduction for interest on corporate debt in favor of the immediate deductibility of business expenses. For private equity firms that rely heavily on borrowing to make deals, the shift could significantly alter the economics of many transactions by raising the cost of capital. |
| “We are working to educate as many lawmakers as we can,” said James Maloney, vice president for public affairs at the American Investment Council, which represents the private equity industry. | “We are working to educate as many lawmakers as we can,” said James Maloney, vice president for public affairs at the American Investment Council, which represents the private equity industry. |
| Both the Trump administration and Republicans in Congress have said they will need to address the repeal of the Affordable Care Act before diving into tax legislation. Separating the two, however, is not so simple. | Both the Trump administration and Republicans in Congress have said they will need to address the repeal of the Affordable Care Act before diving into tax legislation. Separating the two, however, is not so simple. |
| One Republican plan that has already stirred controversy would cap the amount of employee health insurance costs that employers can deduct from their corporate taxes. Republicans say the exclusion, one of the largest tax breaks in the code, limits consumer choice and ties workers too tightly to their companies, even though it is economically no different from the “Cadillac tax” on expensive health plans in the health law. | One Republican plan that has already stirred controversy would cap the amount of employee health insurance costs that employers can deduct from their corporate taxes. Republicans say the exclusion, one of the largest tax breaks in the code, limits consumer choice and ties workers too tightly to their companies, even though it is economically no different from the “Cadillac tax” on expensive health plans in the health law. |
| Big-business groups swiftly moved to shoot down the limit on health care deductibility when it came up this month. In a letter to Gary Cohn, director of the president’s National Economic Council, lobbyists including the American Benefits Council, the U.S. Chamber of Commerce and the American Staffing Association argued that the exclusion would represent a new tax on the middle class. And they reminded Mr. Cohn of the president’s promises to protect working class voters. | Big-business groups swiftly moved to shoot down the limit on health care deductibility when it came up this month. In a letter to Gary Cohn, director of the president’s National Economic Council, lobbyists including the American Benefits Council, the U.S. Chamber of Commerce and the American Staffing Association argued that the exclusion would represent a new tax on the middle class. And they reminded Mr. Cohn of the president’s promises to protect working class voters. |
| “American voters want lower cost and high quality health care,” they wrote. “They do not want more taxes.” | “American voters want lower cost and high quality health care,” they wrote. “They do not want more taxes.” |
| Mr. Trump’s address to Congress on Tuesday is expected shed new light on his thinking about a comprehensive tax plan, but thus far the signals from his administration remain unclear. This week, for example, Mr. Mnuchin offered a tepid response when asked on CNBC about the border adjustment tax, offering only that “there’s some interesting aspects of it” and that it remained an option for consideration. | Mr. Trump’s address to Congress on Tuesday is expected shed new light on his thinking about a comprehensive tax plan, but thus far the signals from his administration remain unclear. This week, for example, Mr. Mnuchin offered a tepid response when asked on CNBC about the border adjustment tax, offering only that “there’s some interesting aspects of it” and that it remained an option for consideration. |
| For his part, Mr. Trump, who previously described the concept as overly complex, seemed to express more openness to it in an interview with Reuters on Thursday. “It could lead to a lot more jobs in the United States,” Mr. Trump said. | For his part, Mr. Trump, who previously described the concept as overly complex, seemed to express more openness to it in an interview with Reuters on Thursday. “It could lead to a lot more jobs in the United States,” Mr. Trump said. |
| “I certainly support a form of tax on the border,” he said. | “I certainly support a form of tax on the border,” he said. |
| Regardless of Mr. Trump’s eventual position, Senate Republicans have been increasingly pessimistic about the border tax. Senator Lindsey Graham, Republican of South Carolina, said the proposal would not win the support of 10 Republican senators, essentially declaring it dead on arrival. | Regardless of Mr. Trump’s eventual position, Senate Republicans have been increasingly pessimistic about the border tax. Senator Lindsey Graham, Republican of South Carolina, said the proposal would not win the support of 10 Republican senators, essentially declaring it dead on arrival. |
| Even if that is overstated, Republicans will struggle to lure a sufficient number of Democrats to sign on to a tax bill. It would be a struggle just assembling the simple majority needed to make changes to the tax code through a parliamentary gambit in the budget process that would shield a tax bill from a filibuster. | Even if that is overstated, Republicans will struggle to lure a sufficient number of Democrats to sign on to a tax bill. It would be a struggle just assembling the simple majority needed to make changes to the tax code through a parliamentary gambit in the budget process that would shield a tax bill from a filibuster. |
| The forces of outside resistance, meanwhile, show no sign of letting up. | The forces of outside resistance, meanwhile, show no sign of letting up. |
| The conservative advocacy and political action committee Club for Growth this week unveiled a television commercial in South Dakota to pressure Representative Kristi Noem, a Republican from that state who sits on the Ways and Means Committee, to oppose the border adjustment tax. The ad claimed that the tax would cause the prices of clothes, food and gasoline to spike. | The conservative advocacy and political action committee Club for Growth this week unveiled a television commercial in South Dakota to pressure Representative Kristi Noem, a Republican from that state who sits on the Ways and Means Committee, to oppose the border adjustment tax. The ad claimed that the tax would cause the prices of clothes, food and gasoline to spike. |
| David McIntosh, the group’s president, said that he thought the fixation on an import tax was going to scuttle the chance for a big tax overhaul and that Republicans were cornering themselves by essentially advocating a tax increase. More advertisements are scheduled to be released in other Republican districts to make this case. | David McIntosh, the group’s president, said that he thought the fixation on an import tax was going to scuttle the chance for a big tax overhaul and that Republicans were cornering themselves by essentially advocating a tax increase. More advertisements are scheduled to be released in other Republican districts to make this case. |
| “We’re prepared to keep going,” he said, “even if it gets to the millions.” | “We’re prepared to keep going,” he said, “even if it gets to the millions.” |