Bipartisan Policy Center Event on Tax Reform

BIPARTISAN POLICY CENTER EVENT ON TAX REFORM

MAY 24, 2016

Overview

On May 24, the Bipartisan Policy Center hosted a discussion with Reps. Devin Nunes (R-CA) and Richard Neal (D-MA) entitled, “Tax Reform in 2017: A Bipartisan Pathway.” The event was moderated by former Rep. Earl Pomeroy (D-ND), co-chair of the Bipartisan Policy Center’s (BPC) Tax Initiative.

The event began with opening remarks from Michelle Stockwell, BPC’s vice president of public policy, who spoke about the need to make US business tax code more competitive. She acknowledged the difficulty of pushing tax reform through in the current Congress and “lame duck” administration, consequently stating that the focus is on the next Congress to pass tax reform.

During the discussion, Reps. Nunes and Neal expressed three main challenges to tax reform: partisan ideology; businesses’ capabilities and willingness to restructure their operating models; and whether there is motivation in the White House to advocate for tax reform.

Summary

Rep. Nunes’ Remarks

Rep. Nunes used his remarks largely to advocate for the American Business Competitiveness (ABC) Act, which he introduced in January. He tied in his role as chairman of the House Intelligence Committee by saying that national security is reliant on economic growth. He argued that the US must achieve at least four percent, or else the country would be in a “bad situation.” He said this level of growth can only be reached if businesses increase investments, and noted that the ABC Act encourages investment by allowing 100 percent expensing. Rep. Nunes cautioned the tax could only work if business, especially big businesses, were able to both adapt their business models to the tax and were willing to enact such restructuring.

Rep. Nunes was asked about the potential upfront loss in tax revenue caused by the ABC Act. Rep. Nunes responded that in a static scoring model, such loss would be expected. However, he said that static scoring is a mistake, and that a dynamic scoring model would be more appropriate. Rep. Nunes stated that there will be great surges of money into the economy that tax revenue loss will not be a problem. He acknowledged that one of the dangers of the ABC Act is that it could “melt the economy quickly.” However, he felt that Congress could control inflation caused by economic growth. He concluded by reiterating that his tax reform plan would spur the economic growth necessary for domestic