BPC Event on Pass -Through Businesses and Tax Reform

Bipartisan Policy Center

“Are Pass-Through Businesses the Key to Tax Reform?”

Wednesday, February 8, 2017 

Key Topics & Takeaways

  • Factors for Tax Reform: Rep. Vern Buchanan (R-Fla.)   discussed the biggest factors for tax reform: 1) Lowering rates; 2) Full expensing for buildings, equipment, etc.; 3) Eliminating the territorial tax; 4) Bringing back off-shore money; 5) Interest deductibility; and 6) Border adjustability.
  • Timeline for Tax Reform: When asked about the timeline for when the public may see draft bills from the House Ways and Means Committee, or when legislation may get voted on in the House, Buchanan stated that he is optimistic it will get done by the August recess, but “definitely before the end of the year.”
  • Rates: When asked about how “doable” the House Tax Blueprint rates are, Grant Thornton’s Schwarz answered that the rates will have to be worked through by all parties to “satisfy the needs of different constituencies,” as multiple approaches can be taken.
  • Notice and Comment: The National Retail Federation’s Bernstein stressed that it would be better to make the tax reform proposals public with a notice and comment period so that issues can be raised with staff, even if it delays tax reform.

Speakers

Opening Remarks

Earl Pomeroy, Former Representative from North Dakota, Co-Chair, BPC’s American Competitiveness and Job Creation Tax Initiative

In his opening remarks, Pomeroy stressed the need for bipartisan “common ground” to accomplish tax reform, and that it is a “hugely complicated undertaking.” He continued that pass-through businesses are complicated and important, and that Rep. Vern Buchanan (R-Fla.) has been a leader on that issue, adding that if tax reform is accomplished, Buchanan’s fingerprints “will be all over the pass-through chapter.”

Keynote Remarks

Rep. Vern Buchanan (R-Fla.), Senior Member, House Ways & Means Committee

In his keynote remarks, Buchanan stated his optimism that tax reform will be passed this Congress, adding that pro-growth tax reform is needed to grow the economy. He discussed the biggest factors for tax reform: 1) Lowering rates; 2) Full expensing for buildings, equipment, etc.; 3) Eliminating the territorial tax; 4) Bringing back off-shore money; 5) Interest deductibility; and 6) Border adjustability. 

When asked about the timeline for when the public may see draft bills from the House Ways and Means Committee, or when legislation may get voted on in the House, Buchanan stated that he is optimistic it will get done by the August recess, but “definitely before the end of the year.” He further explained that while the Committee will rely on reconciliation if they “have to,” he would rather have a bipartisan bill because it will make the law permanent. 

Panel Discussion

Rates

When asked about how “doable” the House Tax Blueprint rates are, Mel Schwarz, Partner, Grant Thornton, answered that the rates will have to be worked through by all parties to “satisfy the needs of different constituencies,” as multiple approaches can be taken. 

Border Adjustability

Janice Mays, Managing Director, WNTS Tax Policy Service, PwC, explained that there will be a need for a base erosion piece if a territorial tax system is adopted, but that there are other options, to include President Trump’s tax reform proposal, minimum taxes, and proposals from former Rep. Dave Camp (R-Mich.).  

Rachelle Bernstein, VP, Tax Counsel, National Retail Federation, noted that she is “nervous” that economists do not have it right when they say border adjustability will have no impact on trade, will not help exports and will not hurt imports. 

Notice and Comment
Bernstein stressed that it would be better to make the tax reform proposals public with a notice and comment period so that issues can be raised with staff, even if it delays tax reform.

For more information on this event, please click here.