House Tax-Panel Chairman Still Committed to Border-Adjusted Plan

(Bloomberg) -- The House Ways and Means Committee plans to hold hearings in May on potential changes to the tax code, including on a border-adjusted tax, Chairman Kevin Brady said.

The hearings represent the next phase of an effort to overhaul the U.S. tax code by year's end, a goal that Brady and President Donald Trump's administration share.

Brady, a Texas Republican, said on Sunday he remains committed to the border-adjustment concept, which is struggling to gain traction in Congress. It wasn't included in Trump's one-page tax outline released on April 26.

Under a blueprint that Brady and House Speaker Paul Ryan released in June, the 35 percent corporate income tax would be replaced with a 20 percent tax on U.S. companies' domestic sales. Their imported materials would be included in the tax, but not their exports -- the border-adjustment feature.

That BAT was estimated to raise more than $1 trillion in new revenue -- an important help toward making any overhaul plan revenue-neutral, a goal for many congressional Republicans as a way to ensure the tax changes could be permanent.

Vice President Mike Pence said Sunday on NBC's “Meet the Press” that the Trump administration's tax overhaul initially could add to the U.S. budget deficit, but would result in higher economic growth to address it over the long run. Some economists and investment managers have questioned that prospect, warning that deficits are likely to swell.

Policy Retreat

Brady said Trump is “dead serious about leveling the playing field for American companies and workers.”

He spoke to reporters briefly after Ways and Means Republicans met on Capitol Hill for the first day of a two-day policy retreat to discuss the way forward on taxes. “I'm confident that we can achieve tax reform this year,” Brady said, adding that he wants a unified plan that the House, Senate, and White House can agree on.

“Incredibly productive conversation w/ our members today. Exciting ideas and solutions to reform our tax code, create jobs & grow our economy,” the committee's Republicans said on their Twitter feed.

On Friday, Brady said news that the U.S. economy expanded in the first quarter at the slowest pace in three years “underscores the urgent need for pro-growth tax reform.”

To contact the reporter on this story: Sahil Kapur in Washington at skapur39@bloomberg.net.

To contact the editors responsible for this story: John Voskuhl at jvoskuhl@bloomberg.net, Ros Krasny