President Donald Trump is scheduled to give a speech Wednesday in preparation for what is expected to be a fierce battle to reform the tax code.
Republicans have looked towards comprehensive tax reform as a top priority. Since the election last year they have had a clear pathway to do something about it. They hold both congressional chambers and the presidency. But comprehensive tax reform is an ambitious task. The tax code hasn’t been reformed in any significant way since 1986.
Trump is slated to make the case for why tax reform is so critical during a speech in Springfield, Missouri. The White House released an early summary of its plan this year which outlines what the administration hopes to achieve. The summary mirrors many of the same goals congressional leaders highlighted last year.
“When he talks about tax reform I just think he needs to make the case for why it’s important, and why it’s important for everyone,” Carnegie Mellon University Prof. Jeff Kupfer told InsideSources. “Why it’s important for middle-class voters, why it’s important for business, and therefore for jobs and economic growth.”
The Congressional Budget Office (CBO) found in an analysis that the current tax code is making the United States increasingly less competitive worldwide. The National Taxpayers Union Foundation found in a 2015 study that the economy loses $233.8 billion annually because of the complex tax code.
“I expect the speech will layout broad principles and goals for tax reform,” Adam Michel, tax policy and the federal budget expert at The Heritage Foundation, told InsideSources. “I don’t expect any specific policy details. Those will come later through the regular order process.”
Trump has previously promised to simplify the tax code and reduce rates to help spur economic growth. He is also in a position to help congressional leaders promote those ideals and urge his supporters to hold Congress accountable.
“The fact that the president has the bully pulpit is very important for tax reform,” Kupfer said. “He needs to begin explaining it in terms so everybody can understand why it’s important for everyday people, and not just multinational corporations.”
Republicans have been preparing to make their tax reform push over the past year. They seem determined to succeed with tax reform after failing to replace Obamacare, which the party had campaigned on since 2010.
National Taxpayers Union senior fellow Mattie Duppler notes that the president is in a position to help by communicating why tax reform is important to normal people. “Republicans have traditionally been seen as the pro-business party,” Duppler told InsideSources. “I think unfairly their tax reform ethos has been cast as a corporate or higher income earner exercise. I think Donald Trump … will articulate, in particular, how pro-growth tax reform has an impact up and down the income scale.”
Republican leaders have held hearings and released detailed outlines of what they hope to achieve. House Speaker Paul Ryan and Rep. Kevin Brady introduced a blueprint last year which detailed their goals. The House Ways and Means Committee discussed the need for tax reform during a hearing in May.
Republican leaders have also dropped the border adjustment tax, which was a major sticking point among some party members. The border adjustment tax is a value added tax levied on imported goods. It is applied when a product is produced in a foreign country but sold domestically.
“My biggest concern is that things start getting taken off the table before we actually get to debate,” Michel said. “Congress should be setting its sights on true fundamental tax reform that’s not just temporarily lowering rates. It’s structural reforms like full expensing on the business side, and getting rid of big deductions and complications on the individual side and the alternative minimum tax.”