Last week, legislators announced policy principles and goals for tax reform, indicating a willingness to find agreement in Congress.
Lawmakers took the first steps toward reforming tax policy last week by announcing an outline of their tax plan, according to The Wall Street Journal. The statement identified principles for tax policy and an objective of lowering individual and corporate rates and individual tax rates.
“As Washington shifts its attention to tax reform, small business will be watching. Congress cannot fail again on this key small business priority—they must ensure small businesses are the central focus of tax reform,” said NFIB President and CEO Juanita Duggan in a statement.
The announcement signals that House legislators are abandoning the former border adjustment proposal, which would have cut corporate taxes by creating revenue of $1 trillion over a decade. Spearheaded by House Speaker Paul Ryan, the border adjustment proposal did not receive bipartisan approval. Last week’s tax outline communicates an openness to a new approach that will unify representatives and ease the path towards reform.
“We are confident that a shared vision for tax reform exists, and are prepared for the two committees to take the lead and begin producing legislation for the president to sign,” the outline said.
In an attempt to encourage investment, the framework emphasized faster write-offs for capital expenses. However, the statement did not address specifics, like the amount that individual corporate rates would be reduced or which deductions would be removed. These are details that will be addressed in the next phase of reform, when the tax-writing committees start crafting legislation.
There are several procedural hurdles in passing tax reform. Lawmakers are using a roundabout process, reconciliation, to push their tax proposal through the door, but that means considering special rules. In order to use the reconciliation method, legislators need to agree on a budget, which is now the first order of business.