House Republican: International tax reform unlikely this year

The chairman of a House tax-policy panel said Tuesday that international tax reform is not likely to be enacted this year.

“It’s probably unlikely given the short timeline we’ve got, given the occupant in the White House, and also dealing with the Senate,” said Rep. Charles Boustany (R-La.), the chairman of the House Ways and Means Committee’s tax policy subcommittee.

{mosads}Still, Boustany said he aims for his subcommittee to write an international tax reform bill this year and see how far it can move.

“We cannot sit back and wait for circumstances to be ideal to move forward,” he said at an event at the American Action Forum.

Boustany suggested that an international tax reform bill could lower the corporate tax rate to 20 percent and consider taxing innovation at an even lower rate.

Congress needs to look at all ideas, including those like proposals from GOP presidential candidates Ted Cruz and Marco Rubio that would move the U.S. to a consumption-based tax. However, a move away from an income tax will “change the time horizon for tax reform,” which is an issue given the need for quick action, he said.

Boustany said there needs to be a “sense of urgency” about reforming the tax code.

One reason for the urgency is because the Organization for Economic Cooperation and Development’s (OECD) international tax recommendations have “created a relatively hostile tax environment,” he said. Countries in the European Union have responded to the project by lowering their tax rates and making changes to their tax codes, while the United States continues to tax American companies’ overseas earnings and have a high corporate tax rate, he said.

A particularly troubling part of the recommendations are requirements for multinational companies to provide foreign countries with tax information, he said.

Boustany highlighted a bill he introduced in December that would “create more leverage for our Department of Treasury.” Under the bill, if a foreign country abuses the reporting requirements or does not safeguard the confidentiality of American businesses’ information, Treasury would have the power to withhold or suspend reporting to that country.

Thomas Neubig of the OECD said the group’s project is designed to help countries each enact their own legislation in a coordinated way to address base erosion and profit shifting.

If an unintended consequence of the project is that it helps the United States implement tax reform, “that would be a real plus,” he said.