Summer Is Selling Season for Tax Reform

August recess will be key for lawmakers and business groups eager to build momentum for the effort.

House Speaker Paul Ryan high-fives Jose Batista after he finished sewing a baseball cleat upper during a tour of the factory floor at a New Balance factory last week in Lawrence, Mass.
AP Photo/Stephan Savoia
Casey Wooten
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Casey Wooten
July 25, 2017, 8 p.m.

Lawmakers, businesses, and conservative groups backing the GOP tax-reform effort have a big challenge: to avoid the pitfalls that have stymied the effort to repeal Obamacare.

Repealing the health care law and passing tax reform are key pillars of the Republican agenda for 2017, but intraparty battles have dragged out the repeal process far longer than expected. It’s unclear when Congress will settle the health care issue, but as the August recess approaches, some lawmakers and policy groups are ready to pivot to the next item on the agenda: rewriting the tax code.

Congressional leaders say they’ll move to a tax-reform bill in the fall, but to avoid some of the challenges that have beset the Obamacare-repeal effort, tax writers are looking to set the narrative early with an August push to sell their plan to the public—and perhaps some in their own caucus.

“What you want is an environment where members come back from August saying, ‘I heard we’ve got to get a tax bill done’,” said Sage Eastman, a former Ways and Means staffer and now a principal at lobbying firm Mehlman Castagnetti Rosen & Thomas.

House Ways and Means Committee Chairman Kevin Brady said August will be key to rolling out the GOP’s messaging campaign on tax reform.

“Members of Congress will be back home, engaging their small businesses, their families, their job creators on this opportunity to fix this broken tax code and get the economy going,” Brady told reporters last week.

Lawmakers won’t have legislative language to show constituents, but Brady said that isn’t needed to roll out a broad tax-reform effort. The committee is likely to unveil messaging materials for members this week that will focus on advancing tax reform to boost the economy, a staff member close to the process said.

House Speaker Paul Ryan kicked off his messaging effort Thursday with a speech at a New Balance shoe factory in Lawrence, Massachusetts, calling the GOP effort a “once-in-a-generation” moment to rewrite the code for the first time since 1986. Ryan stressed the need for a simplified code, one that would allow most Americans to fill out their tax returns on a postcard-sized form.

Business and conservative groups are kicking their messaging into gear as well.

The U.S. Chamber of Commerce will launch a “multifaceted effort” with its member companies and local chambers in the coming weeks to push its position on tax reform, said Neil Bradley, senior vice president and chief policy officer.

For Bradley, the campaign is about getting the public on board with a reform bill, but also avoiding the difficult politics that plagued the health care effort, in which the conservative and centrist wings of the GOP struggled to find common ground on details such as Medicare funding.

“What we’re trying to do is remind folks it’s OK to compromise to achieve the end goal of fundamental tax reform that grows the economy,” he said.

U.S. Chamber President Thomas Donohue penned a letter last week spelling out the message to lawmakers: “Failure is not an option” on tax reform.

“In the upcoming cycle, in addition to looking for candidates who support free enterprise, we will be focusing on individuals with a demonstrated willingness to govern, which means reaching consensus so that legislation can be passed and enacted into law,” Donohue said. “Promises were made; promises must be kept.”

Conservative groups backed by the Koch brothers are planning an August pivot to tax reform. Americans for Prosperity is set to kick off its messaging campaign Aug. 2 with a Washington event featuring House Freedom Caucus Chairman Mark Meadows, said Sean Lansing, chief operating officer at AFP.

Meadows has been a vocal supporter of tax reform, but has criticized Brady and Ryan’s proposed border-adjustment tax, a levy on imports but not exports.

Lansing said that AFP and its network of state-level groups will hold about 50 events throughout August, focusing on pressing lawmakers to simplify the tax code, lower rates and abandon the proposed border tax.

“We are really ramping up our grassroots effort here as the calendar turns to August,” Lansing said.

Top GOP House, Senate, and administration officials, known as the “Big Six,” have been meeting behind closed doors for months to hammer out a broad outline before sending directions to the tax-writing committees. That should produce more consensus on how to press forward with a reform bill compared to the Obamacare-repeal effort, Eastman said.

“Here, unlike in health care, you have a concerted effort to come to as much agreement as possible before beginning the actual committee and floor action,” Eastman said.

The House, Senate, and administration still need to work out key details before they can move legislation. There’s no public consensus among top officials on whether to keep the border-adjustment tax, what the target corporate and individual tax rates should be, or which deductions to eliminate.

And the cooperation hasn’t extended to Democrats, who say they’ve been largely shut out of the process.

“Majority leadership in the Senate has signaled that they plan to move tax legislation with the same my-way-or-the-highway approach called reconciliation they’re using to force a vote on TrumpCare,” Senate Finance Committee ranking member Ron Wyden said during a recent hearing on tax reform. “It’s hard to look at that evidence and find any proof that the majority party wants real Democratic involvement in tax reform.”

Some Finance Committee Democrats have pressed chairman Orrin Hatch on whether the panel will hold hearings or a markup of any tax-reform legislation. So far, Hatch has been noncommittal.

Brady says lawmakers will bring up a tax bill shortly after Congress returns from the August recess, but the Obamacare-repeal effort still looms overhead. Eastman said failure to pass a repeal bill could dampen any hard-fought momentum on tax reform.

“Business groups may still stay focused on taxes, but if you have a failure or lack of resolution on health care, what then are the grassroots saying, what is the topic of talk radio?” Eastman said.

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