Current tax reform prospects
April 20, 2017
By Stacey May, Director of Tax Credits
After the Republican plan to replace Obamacare failed to come to a vote in the House of Representatives due to a lack of support, lawmakers are pivoting their attention to tax reform. While President Trump purported to have his own plan that differed slightly from the Republican blueprint presented in June 2016, he has now taken a step back and said he is willing to work with both sides of the aisle to form a compromise.
One sticking point, among many, is border adjustability. At its core, this provision eliminates the ability for companies to deduct the cost of imports as well as the tax on income attributable to exports. Without border adjustability in a final bill, and also due to the failure of the health care bill, a lower corporate tax rate will be difficult to achieve in order to maintain revenue neutrality. Without revenue neutrality and consensus from both Republicans and Democrats, permanent tax reform becomes a difficult task.
Due to Congressional rules, without 60 votes, any tax measures Republicans may pass via a simple majority will only be temporary. After members return from recess in a couple weeks, hearings and meetings regarding tax reform begin in earnest. As things currently stand, most experts don’t expect any bill to pass until late 2017 or early 2018.
The Work Opportunity Tax Credit (WOTC) is well-positioned to survive until at least its current expiration in 2019 even if it does not become a permanent part of the code with reform. HKP and other members of the National Employment Opportunity Network will visit Capitol Hill in May to further make the case for WOTC and will continue to lobby on behalf of WOTC throughout the year to make sure it is included in any final bill.