Congress Opens Battle to Reshape Taxes, and the Goal Isn’t Perfection


WASHINGTON — Congress fired the official starting gun on its big plans to overhaul the tax code on Thursday, publicly debating, sometimes sharply, the shape of legislation that could affect every part of the American economy.

Republicans have been scrambling to find a way to pass an ambitious re-engineering of the tax system in the next six months amid a raft of looming fiscal fights and dysfunction in the White House. Several congressional leaders have expressed skepticism that it will happen this year. But the first public hearing of the House Ways and Means Committee on overhauling taxes gave Republicans a chance to begin the debate.

Democrats denounced the rehashing of “trickle down” tax policies of the past. Advocacy groups unfurled new campaigns to kill the central provision of the Republicans’ plan, a border adjustment tax on imports.

Facing such daunting obstacles, Republicans insisted that it was now or never for major tax revisions and that they must not let fantasies of a perfect “unicorn” tax code get in the way of getting something done.

“While there is no perfect way to tax, there are proven solutions to grow our economy and improve the lives of all Americans,” said Representative Kevin Brady of Texas, the Republican chairman of the Ways and Means Committee.

Representative Peter Roskam of Illinois, the Republican tax policy chairman on Ways and Means, signaled that lawmakers would need to show flexibility to make the tax system better for everyone.

“There’s an old phrase that says when the bulls fight, the grass loses,” he said. “Pursuing the perfect tax code is a complete illusion.”

Republicans and Democrats generally agreed on the need for a comprehensive tax overhaul that does not add to the deficit. But beyond that, the disagreements were many.

Democrats assailed the tax ideas promoted by congressional Republicans and the Trump administration as giveaways to big companies and the rich. They called for tax cuts aimed at the middle class. “I will not vote for tax reform that is targeted to people who are the engine, I want to take care of people who are in the back cars and in the caboose,” said Representative Bill Pascrell Jr., a New Jersey Democrat.

Democrats also accused Republicans of not being interested in working with them on a tax bill and argued that a task so mammoth should have feedback from a range of perspectives beyond business interests. “Where are the women? Where are the minorities?” asked Representative John Lewis of Georgia, lamenting that the panel of witnesses invited to testify about the need for tax reform was composed of five white men.

While some members of Congress have expressed hopes for a grand bipartisan bargain on tax reform, Republicans in Congress and President Trump have so far signaled that they plan to go it alone. This means they will be walking a tightrope by using the Senate’s budget reconciliation process, which allows legislation to pass with a simple majority but dictates that any changes expire after a decade if they add to the deficit.

The elephant in the room on Thursday was the border adjustment tax, which lawmakers addressed mostly in general terms because it will get a hearing of its own next week. Mr. Brady said he remains fully committed to the concept of taxing imports while letting exports go tax free even though the Trump administration and many Republicans in the House and the Senate think the idea is unworkable.

While many tax experts and exporters believe that the border adjustment tax is a smart idea that would make American businesses more competitive globally, the resistance to it from lobbyists for retailers and importers is intensifying as the momentum behind tax legislation gathers pace.

Outside the building where the hearing was convened, protesters held signs opposing the tax. The billionaire Koch brothers stepped up their opposition to it on Thursday, announcing through their advocacy groups Freedom Partners and Americans for Prosperity a multimillion-dollar campaign to promote tax cuts — but not the border tax.

The Treasury secretary, Steven Mnuchin, showed little affection for the idea while testifying steps away before the Senate Banking Committee. “We think in the current form it doesn’t work. It has too much risk to the economy,” Mr. Mnuchin said.

Republicans in Congress are meeting regularly with the White House economic team in the hopes of bridging their differences and coming up with a unified tax plan this spring or in early summer.



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