WASHINGTON, June 22 (Reuters) - The top Republican on tax policy in the House of Representatives rejected the possibility of cutting taxes without fundamental changes to the U.S. tax code on Thursday, as the main actors in the tax reform debate prepared to meet for a fourth time.
With the window for tax reform narrowing, lobbyists and analysts say Congress could abandon comprehensive tax reform for simple tax cuts to reduce the U.S. corporate tax rate from 35 percent to 28 percent, well above the 15 percent advocated by President Donald Trump.
But House Ways and Means Chairman Kevin Brady, one of six principals involved in closed-door efforts to agree on legislation, told CNBC that such a measure would not meet the Republican goals of bolstering economic growth and enhancing U.S. business competitiveness overseas.
“It’s not acceptable to me. I don’t think it’s acceptable to the House or anyone else, for that matter. Look, that won’t make us competitive,” Brady said.
“Just doing low rates is a little like putting supercharged fuel in an old clunker of a tax car. There’s no question it’ll go faster. It can’t keep up with the newer models on the road,” he added. “We’ve got to go after a competitive design.”
Brady spoke as principals prepared to meet later on Thursday. Members of the group have vowed to make good this year on a top Republican campaign pledge to overhaul the U.S. tax system. But while the principals have met three times, the discussions have major issues to resolve. ”How low we can get these rates; how do we stop businesses from continuing to leave the U.S.; and more importantly, how do we bring those supply chains back; how we deal with issues like full and unlimited expensing – those are still parts of this discussion,” Brady said.
Brady and House Speaker Paul Ryan are pushing for changes outlined in the “A Better Way” agenda released a year ago, including a border adjustment tax that would tax imports but exempt export revenues from federal tax.
The measure could raise more than $1 trillion in revenue to help pay for tax cuts and effectively resolve the problem of corporations shifting profits overseas. But it is opposed by some industries and unpopular with Republicans in the House and Senate who fear it would raise consumer prices. (Reporting by David Morgan and Doina Chiacu; Editing by Andrea Ricci)