Tax Reform Will Be Next Test for Ryan’s ‘Better Way’

The emergence of tax reform as a top legislative priority for GOP leaders and the Trump administration following the collapse of the American Health Care Act poses another test for the “Better Way” proposal rolled out last year by House Republicans.

The blueprint, introduced in June by Speaker Paul Ryan (R-Wis.) and House Ways and Means Committee Chairman Kevin Brady (R-Texas), proposes shifting the U.S. tax code to a consumption-based system, in addition to eliminating the estate tax and the alternative minimum tax, allowing companies to fully expense capital investment and placing a “border adjustable” tax on imports while allowing an exemption for exports.

But while there’s an appetite for tax reform among congressional Republicans, some in the Senate might not be as hungry as their counterparts in the House.

A day before House leaders pulled the Obamacare repeal bill from floor consideration, Sen. Bob Corker (R-Tenn.) said he was still undecided on the proper approach for tax legislation. The Tennessee Republican described a fork in the road that members will face: One path is a bold action like the House GOP plan, the other is a base-broadening that’s “sort of your standard, typical tax reform.”

“What I’d like to see is a plan in its totality, and then we’ll go from there,” Corker, a member of the Senate Banking Committee, said in a brief interview Thursday. “Will it be this more intellectually interesting route, or the more standard route? Around here, things kind of have to sink in.”

Much of the battle will first take place in the House. Phil English, a former Republican congressman from Pennsylvania who now works at the law firm Arent Fox LLP, said Monday that there are “are all kinds of opportunities to go down cul-de-sacs and intellectual dead ends in the tax reform debate.”

“There are many opportunities in tax reform for outside interest groups to insert themselves and come in with bumper-sticker- ready solutions that actually end up killing real reform,” said English, a senior government relations adviser at the Washington firm.

For Rep. Warren Davidson of Ohio, a conservative Republican who replaced former House Speaker John Boehner last year, part of the problem with the GOP health care bill was that it wasn’t bold enough, which has him hoping the same isn’t true of tax reform. Davidson is a member of both the Republican Study Committee and House Freedom Caucus, and he sits on the House Financial Services Committee.

“People read the ‘Better Way’ blueprint for health care and thought it meant we were going to do bold things,” Davidson said in an interview Monday. “The bill that we put on the floor wasn’t as bold. And time will tell what will happen with tax, but what’s been laid out in the ‘Better Way’ is a bold plan.”

Since the blueprint’s rollout last year, Brady has been collecting input from rank-and-file members, as well as Democrats and industry groups concerned about issues like border adjustability. Brady spokeswoman Emily Schillinger said in an email statement Monday that the Ways and Means chairman “will be even more active on this important issue going forward.”

Davidson is one of the rank-and-file members who has met with Brady. In that meeting, the Ohio Republican floated cutting payroll taxes to put more money in the pockets of consumers, which he said could remedy concerns that border adjustment would hit retail and energy prices.

Davidson also said that a top-down, deadline-driven legislative effort on tax reform could be perilous if it resembles the failed efforts on display last week with the health care bill.

“What I hope one of the lessons learned is, is that you can create a rough draft but there has to be this period of collaboration,” he said.

Morning Consult