By RICHARD RUBIN, Jun 27, 2016 9:54 am ET
House Republicans unveiled what they called a “bold” tax agenda Friday with lower rates, immediate write-offs for capital investment, shorter tax forms and a rethinking of international rules. Why? And what comes next?
- Republicans learned something.
In 2014, then-Rep. Dave Camp released a detailed plan that fell flat almost instantly – among Republicans. Businesses complained that his international tax rules were too stringent and that spreading deductions for capital costs over more years would hurt investment.
Those groups got what they wanted this time. Under the new plan, capital expenses get deducted immediately and foreign sales aren't taxed at all. The statutory corporate tax rate drops to 20% from a world-high 35%.
“What we learned during the Camp draft, if you stay with the old income tax system, you can never get anything passed,” said Rep. Devin Nunes (R, Calif.). “We got pushback from everyone, every sector. And then by the time you tried to put that back together, you weren't going to get the growth and investment that you need.”
Answering the complaints about Mr. Camp's draft just makes other groups take up the mantle of opposition. Already officially “disappointed” is a coalition that backs full deductibility of interest, including the commercial real estate and private equity industries.
- Capital matters.
The plan benefits capital-intensive industries, such as manufacturing and oil and gas. It builds on Mr. Nunes's own plan, and the idea of full expensing of capital investment has gradually worked its way into the Republican mainstream.More...