By Dean Franks, vice president of congressional affairs, ARTBA
Congressional Republicans and Trump administration officials Sept. 27 delivered long-awaited principles for a tax reform package they will attempt to move through Congress this fall.
The “Unified Framework for Fixing Our Broken Tax Code” is short on details and is largely full of broad concepts that were already widely known goals of any GOP tax plan, including:
- Reducing the corporate tax rate to 20 percent;
- Reducing the number of individual tax brackets from seven to three or four;
- Repealing the Alternative Minimum Tax;
- Repealing the estate tax;
- Expensing/writing off of depreciable assets; and
- Reforming the nation’s international tax code, including a one-time tax on profits of U.S. companies holding corporate earnings abroad.
Details on how the changes in the tax code would be paid for were scant, besides broad references to eliminating certain deductions.
Also not included in the GOP framework was any reference to permanently solving the Highway Trust Fund (HTF) revenue shortfall. Given the lack of details and the multiple references both publicly and privately that the House and Senate will now follow “regular order,” which means tax committees in each body will produce legislation and members will be allowed to offer amendments. As such, the opportunity to address the HTF’s fiscal dilemma is still very real.
Accordingly, House Highways and Transit Subcommittee Chairman Sam Graves (R-Mo.) and Ranking Member Eleanor Holmes-Norton (D-D.C.) sent a Sept. 28 letter to tax reform leaders both supporting inclusion of a HTF fix as part of tax reform. It also reminded leaders of the June 12 letter (included in link above) 253 bipartisan members of the House signed asking for a HTF solution to be part of any tax reform legislation.
The next steps for tax reform to move forward require both the House and Senate to pass FY 2018 budgets that include what’s known as “reconciliation” instructions – a procedural maneuver that allows for only 50 votes in the Senate to pass a tax package and usurp the chamber’s rules that allow a minority to block legislation. The House is slated to take up its version of the budget as soon as the week of Oct. 2.
Meanwhile, the Senate budget details came out Sept. 29 and, like the House budget, ignores many of the Trump administration’s requests, including cutting HTF-supported transportation construction programs to available receipts once the next trust fund shortfall is reached, sometime in 2021. Also similar to the House budget, the Senate version includes a deficit-neutral reserve fund that allows for spending on infrastructure to be increase beyond the levels laid out in the budget, as long as additional revenues are generated to pay for the increases or corresponding cuts elsewhere in the government. ARTBA and its partner organizations sent an April 7 letter asking for such a reserve fund to be included.
As the tax reform process moves forward in the House and Senate, ARTBA will continue to push for a permanent HTF revenue solution that stabilizes and grows federal highway and transit investment. We will keep you posted as this process continues to move forward.