Update-Analysis: Congressional leaders remain optimistic about tax reform

House leadership plans to use the budget reconciliation process for FY18 to pass tax reform

Recently, Vice President Mike Pence and House Speaker Paul Ryan (R-Wis.) spoke publicly about Congress and the administration’s ongoing efforts to complete comprehensive tax reform this year. Both leaders expressed an optimistic view of the path forward for tax reform, with the administration’s angling for hearings and markups in September, and Ryan saying he hopes to accomplish tax reform before Thanksgiving. These comments come as the Senate continues its work on health care issues, which needs to be completed before the full Congress can focus on tax reform.

Although neither Ryan nor Pence provided substantial details beyond the plans the speaker and administration have already released, Ryan maintained he will not settle for temporary tax cuts, repeatedly stating comprehensive tax reform must remain the end goal. In contrast, Pence used the phrase “tax cuts” on more than one occasion, potentially opening the door to settling for a short-term solution.

House leadership plans to use the budget reconciliation process for FY18 to pass tax reform, the same method Congress is using for health care reform. Across the Capitol, Senate Finance Committee Chairman Orrin Hatch (R-Utah) released a request for “stakeholders to provide ideas, proposals and feedback on how to improve the American tax system.” The deadline for submissions is July 17.

NACo continues working to develop resources and materials to support both the tax-exempt status of municipal bonds and the state and local tax (SALT) deduction in tax reform efforts. Recently, NACo helped lead a bipartisan letter of over 70 members of Congress from just four states in support of the SALT deduction.

As tax reform discussions continue, the House also must attend to other “must-pass” legislative items, including raising the debt ceiling later this summer, passing another spending bill to fund the government at the end of September and taking up any replacement bill for the Affordable Care Act passed by the Senate.