Business

Brady sees small-business support for tax bill

by Naomi Jagoda - 11/05/17 7:54 PM ET

House Ways and Means Committee Chairman Kevin Brady (R-Texas) said on Sunday that he thinks he’ll be able to get a leading small-business group on board with the House GOP’s tax bill.

“We’re having discussions on how best to deliver tax reform to small businesses on Main Street,” he told reporters outside a meeting of Ways and Means Committee Republicans. “The two options and approaches we have work, but we’re always looking for ways to simplify that approach.”

The National Federation of Independent Business (NFIB) said Thursday that it couldn’t support the bill in its current form, arguing that the measure doesn’t provide tax relief for enough small businesses.

{mosads}The bill creates a new top rate of 25 percent for income from “pass-through” businesses, which currently face a top rate of 39.6 percent. The bill also includes rules aimed at preventing wealthy taxpayers from recharacterizing wage income as business income to avoid taxes.

Brady says the panel is continuing to look at ways to simplify the rules relating to the new lower rate for pass-through businesses, which includes many small businesses. He said that lawmakers are continuing to work with the NFIB and other groups on this issue.

The Texas Republican also defended the use of guardrails against abuse of the pass-through rate.

“That’s always been recognized as safeguards we’d have to have in place,” he said.

Ways and Means Committee Republicans met on Sunday ahead of the panel’s markup of the tax bill. The markup is scheduled to start on Monday and is expected to be finished by Thursday.

Brady is expected to offer an amendment at the start of the markup. He said he expects amendments from Republicans to be “fairly limited” during the week.

“We’ll probably be dealing with a lot of the Democrat amendments,” Brady said.

Democrats have largely blasted the tax bill as a boon for the wealthy at the expense of the middle class. Ways and Means Committee Democrats are expected to offer dozens of amendments during the markup.

Rep. John Larson (D-Conn.) said that Democrats are also expected to criticize the process and the quick timetable in which Republicans want to pass the bill.

“They’re just hoping that they can get this through before everybody finds out who the losers are,” he said.

In the time since the bill came out, Ways and Means Committee members have been hearing concerns about various provisions from lawmakers and their constituents.

For example, Rep. Mike Kelly (R-Pa.) said that areas where he’s heard concerns from constituents include the bill’s elimination of the adoption tax credit and the deduction for medical expenses.

Brady said he doesn’t know if there’s a tax preference eliminated in the bill that lawmakers haven’t brought up.

Lawmakers have little room to restore tax breaks that lose revenue, since under their budget resolution the tax bill can’t add more than $1.5 trillion to the deficit over a decade. Brady said that because of that, he’s asking groups to propose solutions that will help lawmakers remain under the $1.5 trillion limit.

Some groups, including auto industry groups and conservative groups backed by wealthy GOP donors Charles and David Koch, have expressed concerns about a provision in the bill that imposes 20 percent excise tax on U.S. companies’ purchases from foreign-related firms.

The provision is designed to help prevent an erosion of the tax base as the bill moves the U.S. to a “territorial” tax system that exempts dividends of American companies’ foreign subsidiaries. But groups have expressed concerns that it might hurt consumers.

Brady said that lawmakers have been getting a lot of feedback in the international area.

“We’ve already begun thinking through … are there adjustments that can be made in that area that work,” he said. “At the end of the day, we need good safeguards against importing expenses and deductions and all that and level that playing field. But I do anticipate changes there.”

Another part of the bill that has drawn concerns is its proposed elimination of the tax exemption for new private-activity bonds — which can be used to finance projects including facilities for nonprofits, transportation infrastructure, low-income housing and student loans.

Brady said that even if elimination of private-activity bonds remains in the tax bill, he “wouldn’t be surprised if the White House has perhaps suggestions on private partnerships and credits as part of the infrastructure-type package.”

After the meeting, Brady added that lawmakers are looking to see if there are more things they can do to help families. He also said he’s working to mitigate “unintended consequences” on insurance-related provisions.

Tags Kevin Brady Mike Kelly