By John Gimigliano, Principal in Charge, Federal Legislative & Regulatory Services, Washington National Tax, KPMG LLP
Jul 07, 2017
From the Tax Governance Institute
Six key tax reform policymakers have been meeting on a regular basis to hash out some version of a tax overhaul that may be able to pass both the House and the Senate.
The so-called “Big Six” are:
- Speaker of the House Paul Ryan (R-WI)
- House Ways and Means Committee Chair Kevin Brady (R-TX)
- Senate Majority Leader Mitch McConnell (R-KY)
- Senate Finance Committee Chair Orrin Hatch (R-UT)
- Secretary of the Treasury Steven Mnuchin
- Director of the National Economic Council Gary Cohn.
Who’s who—and what each (may) want
Let’s take a look at the “Big Six” and their tax reform priorities:
Speaker Ryan: The Speaker has advocated for tax reform for most of his Congressional career, and has been closely associated with the House Republican Blueprint and its features, including the controversial border adjusted tax (BAT). But as a pragmatist, he could be willing ultimately to embrace the Senate’s approach to tax reform.
Chairman Brady: Brady has expended a large amount of energy on the House Republican Blueprint, and he has been understandably reluctant to abandon it. If pressed in another direction, he may try to retain at least some key elements of the Blueprint (e.g., expensing, a version of the BAT, or special rate for pass-through income).
Chairman Hatch: Hatch supports a plan of corporate integration via a dividend paid deduction regime, but he has not introduced a bill, so the concept remains just that. While it’s unclear whether Hatch would be willing to embrace a more conventional version of tax reform, his support will be necessary for any eventual tax reform bill.
Leader McConnell: McConnell is perhaps best known for his mastery of Senate procedure and politics. He will likely be a driving force in putting together a bill that the Senate can pass – which could impact the political fortunes of his Republican Senate colleagues standing for reelection in 2018 and 2020.
Secretary Mnuchin: Mnuchin, echoing the President’s position on tax reform, has shown lack of support for the BAT, for limiting interest deductibility, and for accepting the concept of revenue neutrality. This puts him at odds with the House plan and with Senate leadership. Mnuchin has also expressed concern about how tax reform will be administered by the IRS.
Director Cohn: The President’s chief economic advisor doesn’t always subscribe to Republican tax orthodoxy. He has raised such outside-the-box ideas such as a value added tax, a carbon tax, or even tax increases on the wealthy. While these are unlikely provisions for Republican tax reform, Cohn has both the President’s ear and support.
Nothing is certain
Regular meetings of the Big Six have given rise to a modest rebound in confidence that tax reform can advance in 2017. It’s been rumored that slow but steady progress has been made, and the Big Six hope to reach a deal as soon as mid-September. But considering their varied interests and priorities, it’s far from certain they’ll develop a consensus by then on what tax reform should be.
This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG LLP.
The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.