WASHINGTON (Reuters) - The Trump administration and top Republicans in U.S. Congress are within a few weeks of agreeing on central aspects of a tax overhaul plan that will determine the contours of legislation now expected in September, an administration official told Reuters this week.
Under pressure from business groups and rank-and-file Republicans, Trump officials and congressional leaders still need to decide how much to slash tax rates and if the package should increase the federal budget deficit, administration and congressional sources said.
The future of a border adjustment tax, or BAT, proposal from House of Representatives Republicans, meant to boost exports and discourage imports, could also be decided within the next two to three weeks, the administration official said.
President Donald Trump has pledged to make a tax overhaul a priority. But after 20 weeks in power and numerous distractions, he has yet to offer a tax bill to Congress. Expectations for legislation have slipped repeatedly, from spring to summer and now after the U.S. Labor Day holiday.
Still, stocks are up since Trump’s November election win and companies and wealthy Americans are positioning themselves to realize more income in 2018, betting lower taxes are coming.
The head of the House Freedom Caucus, a bloc of three-dozen conservatives capable of stalling legislation, on Friday called on Republicans to acknowledge a lack of consensus on the BAT and produce a tax proposal by the end of July.
Trump and fellow Republicans pledged in the election campaign last year to tackle in 2017 the biggest tax overhaul since the Reagan era. But that agenda has been slowed by infighting over dismantling Obamacare and probes of possible ties between Trump’s campaign and alleged Russian meddling in the 2016 election.
The Business Roundtable, a powerful lobbying group that represents chief executives, wrote to Trump and congressional leaders this week calling for a “shift from listening to action” on tax reform.
The administration official, who asked not to be named, said there is broad agreement among participants in the talks on the need to cut taxes, simplify the code, eliminate tax breaks, end taxation of U.S. corporate overseas profits and repatriate an estimated $2.6 trillion in corporate profits held overseas.
But key details remain open to question.
More meetings are expected among U.S. Treasury Secretary Steven Mnuchin, White House economic adviser Gary Cohn, Senate Republican Leader Mitch McConnell, House Speaker Paul Ryan, House Ways and Means Committee Chairman Kevin Brady and Senate Finance Committee Chairman Orrin Hatch and their staff, the official said.
After their third meeting on Tuesday, officials had not decided whether to adopt full expensing for corporations, the administration official said. The policy would allow companies to write off the cost of capital investments such as equipment immediately and plow the money back into their businesses.
The official said the aim of the talks is to agree on a framework by mid-year and release legislation soon after lawmakers’ long August recess.
A key decision awaits the House Republicans’ export-boosting BAT, intended to help pay for reforms while dissuading companies from moving assets, profits and jobs abroad.
The BAT, which would tax imports but exempt export revenues from taxation, has run afoul of many Republicans and drawn criticism from the administration. Officials in Congress and the administration are examining options to the BAT that could reduce erosion of the federal tax base, including rules and a minimum corporate tax.
Decisions on BAT, revenue neutrality and expensing will help decide if Congress can cut the corporate income tax to 15 percent, as Trump seeks, or 20-25 percent as envisioned by the House Republicans’ tax plan.
Reporting by David Morgan; Editing by Kevin Drawbaugh and Meredith Mazzilli