Tax Experts See Little New in ‘Major” Paul Ryan Speech

Tax Experts See Little New in ‘Major” Paul Ryan Speech


House Speaker Paul Ryan on Tuesday reaffirmed Congressional Republicans’ vow to pass a major tax reform package by the end of the year. Given the Republican Party’s control of all the levers of the legislative process, Ryan argued that the time is right to undertake what is possibly the single most difficult legislative task American lawmakers can set for themselves.

“We are going to get this done in 2017,” he said in an address to the National Association of Manufacturers in Washington. “We need to get this done in 2017. We cannot let this once-in-a-generation moment slip by.”

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Ryan’s office hyped the speech well in advance, sending out excerpts and multiple press releases stressing that this was to be his “first major speech on tax reform.” That claim puzzled many in the tax policy community for at least two reasons. First, Ryan has literally been talking about tax reform for years and has spoken on the topic many times.

Second, and perhaps even more odd, was that for a speech given such a build-up, there wasn’t much in this one that Ryan and his fellow Republicans haven’t said before.

“It’s curious to me that they worked so hard to promote this as a major policy speech, and he didn’t really move the ball,” said Howard Gleckman, a senior fellow at the Urban-Brookings Tax Policy Center. “I don’t know what the purpose was.”

“We’re not learning anything new about the direction of tax reform,” agreed Kyle Pomerleau, director of federal projects at the Tax Foundation. Ryan, he said, was mainly restating old positions that he has previously laid out, for example in the “blueprint” for tax reform that he published last year.

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“I think he’s still sticking to the construct of what he thinks reform should be,” Pomerleau said.

The remarks were essentially a high-level review of well-established principles for tax reform that the congressional GOP has largely supported for years. Ryan called for an overhaul of the business tax code, including lowering the current rate and beginning the transition to a system in which US businesses are not taxed on profits earned overseas -- two things that would bring the US in line with virtually every other industrialized country in the world, and which have broad support among both lawmakers and economists.

He also pledged to simplify tax filing for individuals and to lower their rates, as well. The cumulative effect of these things, he said, would be a boost to the US economy that would create more and better-paying jobs.

One issue that Ryan soft-pedaled was the House Republicans’ plan to institute a border-adjusted tax meant to encourage domestic production by taxing imported goods, but not exports. While popular among GOP leaders in the House, the proposal is not very popular at all in the Trump White House. Speaker Ryan on Tuesday characterized the debate of a border tax as a difference of opinion, but it is considerably more than that. The tax would generate revenue that the proposals put forward by the House would need to finance other cuts they are proposing. And the imposition of a border tax is also seen as a bulwark against the erosion of the tax base, because it would reduce the incentive for companies to relocate overseas.

Related: Tax Reform: A Must Win for Trump and the Republican Party

He also scotched the idea, that some Republicans -- including President Trump on occasion -- have supported, of simply pushing through a package of tax cuts and leaving the hard work of reform to a later date.

“We are going to cut taxes,” he said. “But if we are going to truly fix our tax code, we have to fix all of it—both for individuals and businesses. Why? Because this will create jobs. That is what this is all about: jobs, jobs, jobs. Good, high-paying jobs.”

Hanging over the entire speech on Tuesday was the utter improbability that they key promise out of Ryan’s mouth: That tax reform would be completed this calendar year.

It was, to say the least, an odd moment to make such an extraordinary vow. Despite years of promising to repeal and replace the Affordable Care Act, the GOP-controlled Congress has been struggling to manage even that. Ryan barely forced a bill through the House, despite controlling a significant majority of seats. And a bill in the Senate is being drafted in secret because even the party’s own members can’t agree on a large number of issues. By most accounts, a major tax reform bill would make health care reform look like child’s play.

Related: Failure to Pass the GOP Health Care Bill Could Doom Tax Reform This Year

Asked if Congress could realistically get tax reform done in the next six month, Gleckman of the Tax Policy Center was highly skeptical. “Tax reform is way to complicated,” he said. “There are so many unanswered questions.”

For example, he said, Ryan promised to get rid of things like “special interest carve-outs” and “excessive deductions. While these sound like worthy goals, Gleckman said, they are virtually meaningless without specifics.

“I don’t know what ‘special interest carve out’ and ‘excessive deductions’ mean,” he said. There’s little point trying to move forward with a plan, he added, “until these guys are willing to specifically identify what tax preferences they are willing to eliminate.”

Pomerleau, of the Tax Foundation, was equally pessimistic about a major bill getting to the president’s desk by yearend.

“It’s a little optimistic to say that all of this can get done by the end of the year,” he said. “You have to be realistic about the difficulty of tax reform. This stuff is hard.”