Business owners hoping for a quick fix on taxes are going to have to wait until later this year.
Speaker of the House Paul Ryan told Fox News Thursday that tax reform, one of President Trump’s big campaigning points and a goal for his first 100 days in office, will be part of the spring budgetary process, with negotiations lasting months. He also said a repeal of the Affordable Care Act must happen first.
"It's just the way the budget works, and we won't be able to… write our tax reform bill until our spring budget passes,” Ryan said, adding the deliberation process would last through the summer.
Ryan’s comments only tell half of the story, as retailers and members of the Speaker’s own party have indicated they aren’t entirely on board with Republican plans for a tax overhaul.
Perhaps the biggest sticking point is the plan for a border tax, which would radically alter the tax code, creating a 20% tariff on imported goods in an attempt to encourage manufacturing and production in the U.S. The tariff would also be used to pay for Trump’s plan to build a wall along Mexico’s border. The tariff is expected to bring in $1.2 trillion over the next decade, and that money would be critical to funding a substantial decrease in the corporate tax rate. Without it, the Republican tax plan could flounder, according to some analyses.
Already, more than 100 retailers and trade associations, including giants such as Walmart and Target, have banded together in a group called Americans for Affordable Products, to oppose the tariff, because they fear it will raise consumer prices.
In comments to the U.S. Chamber of Commerce on Wednesday, Senator Orrin Hatch (R-Utah), who chairs the Senate’s Committee on Finance, said his list of concerns about the tax include the extent to which it will affect consumers, workers and shareholders, and whether it conflicts with U.S. international trade obligations, or overly burdens specific industries.
“We don’t have definitive answers to any of those questions at this point, and without them, I don’t think I can give a definitive position on the proposal,” Hatch said.
The Senate Finance Committee, which must sign off on new tax proposals, hasn’t weighed in yet on either the Republican blueprint for a tax system overhaul, or the president’s plan, according to CNN.
In addition to a border tax, the Republican tax plan would compress the current number of tax brackets to three from its current seven. It would also reduce the top tax bracket to 33% from its current 39.6%. Other proposals include a repeal of the alternative minimum tax, a reduction in capital gains taxes, and provisions for a more substantial child tax credit.
Trump’s plan would reduce the top corporate rate to 15% from its top federal rate of 35%. That rate would also apply to owners of S-Corps and limited liability companies.
However, Hatch told the Chamber that any tax system overhaul would be difficult to engineer without bipartisan support. “If we don’t get any Democrats on board, we’ll basically need universal Republican support to pass anything through reconciliation.”