The Republican Party's leading voice on taxes and budgets, Paul Ryan, said on Friday that the current Congress has only a few months to pull together a deal to overhaul the US tax code. "My guess is tax reform is a 2015 thing for sure and I think it's got to be done by the end of the summer," the House of Representatives Ways and Means Committee chief told reporters.
Washington has not been able to summon the political will to reform the loophole-riddled tax code for 28 years. And with only a short window of opportunity this year, lawmakers will need to work quickly to find common ground. Ryan said he would prefer to pass a comprehensive tax reform plan this year that simplifies and lowers rates for both companies and individuals. Democratic President Barack Obama has said he wants to push forward with a corporate-only tax reform.
Ryan said he is open to doing tax reform in phases, but if there's no deal by fall for an initial phase, "it's hard to see how that gets done." Congress' energies in the autumn will be consumed with a new round of spending bills for the fiscal year starting October 1, he said. And in 2016, election-year politics will make tax reform more difficult to achieve. A key hurdle for a corporate-only reform deal will be how to treat small business owners, whose profits are often taxed as individual income, he said.
Ryan said he still wants to cut the top corporate and individual tax rates to 25 percent from 35 percent and 39.6 percent, respectively, but he did not say how to do this. He said a tax reform plan unveiled last year by his predecessor as chairman of the Ways and Means Committee, former Representative Dave Camp, was helpful. "We see that as a starting point. We see it as something that educated us."
On trade, Ryan said he would push ahead for a bill to grant the Obama administration "fast track" negotiating authority for major free trade deals, including the Trans Pacific Partnership talks with 11 Asia-Pacific countries. Many Democrats want any trade deals to have provisions aimed at thwarting currency manipulation, but Ryan said such provisions may be counterproductive, encouraging retaliatory tariffs or damaging the dollar's reserve currency status.