Tax Overhaul ‘Ain’t Going to Happen’ If Not by Thanksgiving, Meadows Says
Freedom Caucus chairman says it would be difficult to support corporate rate above 20 percent
House Freedom Caucus Chairman Mark Meadows endorsed Wednesday the White House’s aggressive timetable for overhauling the tax code, saying the effort will die if a bill doesn’t pass before Thanksgiving.
“If we do not have a bill that we’re actually debating in September [that] hopefully gets a vote in October, it will not get to the president’s desk by Thanksgiving. … If it doesn’t get there by Thanksgiving guys, it ain’t going to happen,” the North Carolina Republican said to a crowd of conservative activists at an Americans for Prosperity rally at the Newseum.
Meadows provided two reasons why the tax overhaul effort can not be punted to 2018: his and others’ interest in making the tax bill retroactive to the start of the year, allowing taxpayers to take advantage of the changes when they file next year, and the midterm elections obstacle.
“It’s the political reality in those midterm years everything starts to slow down and you do things around the edges and not bold,” he said.
The timetable Meadows provided of debate starting September, floor action in November and a bill passed through both chamber’s before Thanksgiving is in line with the schedule the White House is anticipating.
White House Legislative Affairs Director Marc Short outlined a similar schedule Monday at a separate Americans for Prosperity event also at the Newseum.
Both Meadows and Short said conservative groups and activists, whom they credited with helping kill the border adjustment tax, need to keep the pressure on lawmakers to get a tax bill done.
“Sometimes members of Congress have a backbone like a banana,” Meadows said, urging activists to ensure the losers in the tax overhaul are special interests on K Street and the winners are the American people.
Corporate rate ‘in the teens’
Meadows outlined a few things he would like to see in any tax plan, citing the need for businesses’ foreign earnings to be repatriated at a reduced rate so they can reinvest the money in U.S. jobs and a “corporate rate that starts in the teens, not in the 20’s.”
His preference is for a 16 percent rate but that anything in the 15 percent to 19 percent range would be acceptable, he reiterated to reporters after the speech. The corporate tax rate is currently 35 percent.
“It would be very difficult to support something that’s higher than that … because you don’t get the economic benefit,” Meadows said.
“In truth, what they’re talking about now is anywhere from 21 to 22, up to 27 percent tax [rate],” he added. “That doesn’t make businesses make a different economic decision.”
The lower the rate, the more offsets Republicans need to find if they want the tax bill to be revenue neutral.
Tax writers say they intend to adhere to that principle using dynamic scoring over the 10-year budget window. A desire to have a revenue neutral bill should not be pursued at the expense of higher tax rates, Meadows said.
If the tax bill is not offset within the budget window, it would prevent tax cuts and other policies in it from being made permanent policy under rules for the budget reconciliation process Republicans plan to use to advance it.
Meadows said he’d advocate for extending the budget window to 15 years to make the revenue neutrality goal more achievable or provide businesses with more planning time should they fail to meet the standards for permanent tax cuts.
“There’s nothing that would suggest that we have to have a 10-year window, and so I’m willing to look at all creative ideas to make sure that we can be as bold as possible on tax reform,” he said.
However, all those discussions are moot if Republicans can’t pass a budget. Meadows said he still needs to see more details of what will be in the tax bill before backing the House GOP budget resolution, among concerns about mandatory spending cuts.
“I’m hopeful that we’ll get those [details] over August recess; in fact I’m optimistic that we will,” he said.
Debt limit, health care
Meadows also spoke about health care and the debt limit in his conversation with reporters. The Freedom Caucus would not back a clean debt limit increase and is pushing for “structural reforms” that would prioritize how debt payments are made, he said.
While the White House has called for a $2.5 billion debt limit increase that would extend beyond the 2020 presidential election, conservatives prefer $1.5 billion because it “gives you two bites at the apple to attach something to it,” Meadows said.
On health care Meadows said he has been involved in meetings about a proposal from Sens. Lindsey Graham and Bill Cassidy that would provide states block grant funding to manage their individual insurance markets.
The key to making that proposal work for conservatives is getting some kind of waiver of the regulations under current law that dictate minimum coverage standards to insurers and drive up premiums, Meadows said.
“If we’re going to send the money to the governors, we need to give them true flexibility,” he said. “If we can get there, we’ll be good.”