Middle Market Policy Roundup
Tax reform, debt ceiling and the border adjustment tax were among the major topics discussed in Washington this week.
House Freedom Caucus Ties Food Stamps, TANF Changes to Tax Reform
House Freedom Caucus (HFC) members will be pushing to include welfare reform in any tax reform package, Politico reported. Rep. Mark Meadows (R-NC) stated the proposed changes by the caucus in the federal government’s food stamps and Temporary Assistance for Needy Families (TANF) programs would provide another $400 billion over ten years. Meadows has stated that the tax reform bill the caucus is drafting would not include a border adjustment tax or full expensing of capital expenditures. The caucus will push for a 20 percent corporate rate that is extended to LLCs and sole proprietorships. HFC members proved instrumental in the House passage of health care reform, and will likely be instrumental in tax reform as well.
Debt Ceiling Is Again a Battleground, This Time with Republicans in Charge
The debt limit, once a simple congressional necessity, has become a partisan-charged task, the New York Times reported. Even with the Senate, House and White House controlled by Republicans, this issue will prove to be time consuming. The Treasury Department has urged a raise to the limit before Congress leaves for its August recess due to tax receipts coming in more slowly than expected. Boosting the limit will prove increasingly difficult as members debate whether to have a “clean” debt increase, or package the bill with other legislative priorities. Before any debt limit increase is passed, the Senate must vote on health-care reform. Both health-care reform and the debt limit must be completed prior to any tax reform bill.
GOP Lawmaker Floats 5-Year Phase-In of Border Adjustment Tax
Chairman of the House Ways & Means Committee Kevin Brady (R-TX) recently floated the idea of a five-year phase in for the controversial Border Adjustment Tax provision in the current GOP tax-reform plan, the Wall Street Journal reported. “Under the phase-in suggested by Mr. Brady, only 20% of import costs would be nondeductible in the first year of the new tax system, stepping up steadily each year until it reaches 100% in the fifth year,” the paper said, adding: “The tax exemption for exports would phase in on a parallel schedule.” A five-year phase in is unlikely to sway or shift current opposition to the plan.