WASHINGTON, D.C. – Yesterday, House Ways and Means Committee Chairman Kevin Brady (R-TX) joined Washington Post Live’s “Tax Reform in America: The Six-Month Report” to discuss the six months since tax reform was enacted to law. Chairman Brady sat down for an in-depth interview with The Post’s Robert Costa to review the booming economy and what phase two is really about.
Robert Costa: “So, what is the timeline for tax reform 2.0?”
“So, this is the schedule the way I see it…. The timeline will be to begin circulating a draft to our House Republicans after we return from the Fourth of July break. We’ll spend the month listening to our colleagues in the House about what they want to see in 2.0 and incorporating those changes. I expect to see the legislative outline released in early August with votes in the fall depending on when the Leadership wants to schedule them. I don’t see it as one bill — I see it as a package of two, three, or four approaches with permanency being one of them. This tax code is huge and there are areas for example in retirement savings that we didn’t get to in tax reform….
“We think the time is right to help families save more and earlier in their life whether it’s for health care or school or for their kids or retirement in the long-term—thinking through some ideas there. And I think, a point I’ll make is that 2.0 is really about changing the culture in Washington, away from wait thirty years for tax reform, watch America fall behind our competitors, watch this tax code get junked up by a bunch of special interest provisions. That was the old way. The new culture is to continuously improve every year, to never fall behind our competitors again.
“And what I’ve asked our colleagues to do is to mirror what we know the most successful corporations do, which is … they wake up every day and ask ‘how can we be more competitive or innovative better?’ I want Congress to look at the tax code every year and ask themselves the same three questions; how do we be more competitive, innovative, better?”
Costa: “I sense this momentum on the House side for this 2.0 but can you give me a sense of will the Senate follow through in the Fall with 2.0?”
“So, I think the House’s job is to develop the best package to send to the Senate. I think the Senate is vitally interested in what can get 60 votes, you know, that they can pass, you know, because we won’t have the reconciliation structure — unfortunately we won’t have the reconciliation in place because of the budget. So, our job is to deliver the very best ideas and I’m confident Leader McConnell and Senate Republicans will choose those areas they have the most interest in and let’s move something to the President’s desk.”
Costa: “What about wages…?”
“A couple things. So this has been a long-term challenge and I think at the end of the day tax reform solves this challenge. We are seeing wage increases for the first time in ten years in the first quarter. But that’s a quarter — we have to wait and let it continue to play out.
“I do think at the end of the day the prior panel talked about incentives for new investment and new technology. This tax code wasn’t just about encouraging businesses to buy more stuff – more equipment, more technology; it was to invest in the productivity of their workers. That’s what drives economic growth for the long term and that’s what drives wage growth for the long term. It’s been missing from the U.S. economy for an awful long time. I don’t think it’s going to reappear overnight, but we got the fundamentals right in the new tax code and I think over time it’s going to drive wage growth up.”
Costa: “We saw bonuses after the tax law passed. Should we expect the same kinds of bonuses next year?”
“So that will be the call for those companies. But clearly what we’re seeing besides the bonuses—here’s an example: Russell Marine in Houston, 160 workers so not a major company but a good mid-sized company… very competitive industry. They gave out one million dollars of bonuses, they raised pay by an average of 10 percent, they already bought six million dollars of new equipment including the largest moveable crane in Texas and they green-lighted a new company headquarters. I was at their old one and it’s old and they need something new. And when you ask that CEO, you know, what does this year look like? And his answer was three words, ’best year ever.’
“We’re seeing that across the country and I’ll make one point: I think the best is yet to come on tax reform because so much of this new code was designed to bring back jobs, investment, intellectual property, [and] patents back to the U.S. to create a giant sucking sound back to America. And when I travel around the country it’s already impacting where these new facilities will be, where the new research will be. That takes time, it takes a long time and planning by a business. And that’s where, frankly, trade issues enter into that decision making as well. Businesses want that certainty and armed with the competitive tax code I think they are hopeful and can see progress on the trade front toward fair agreements with China for example, so that the transition with these tariffs and the impact, frankly, fade away.”
Costa: “So, is there something the government or Congress can do to make sure that Americans are sharing in the profit? That tax for corporations will remain lower, but will companies continue to share those gains?”
“You know I think they will. What we do know is what happens under the old tax code — you know paychecks for most families and middle-class families especially have been stagnant for a decade. Students coming out of school had very few opportunities and it seemed like every month we read – in The Washington Post – about another U.S. company heading overseas, moving something overseas. And that’s changed in a significant way. And I think yes, I think workers, especially if you’re working in a small business today, that optimism of your small business, mom and pop, is the highest in 45 years.
“U.S. manufacturers used to be the most pessimistic of any industry in America because they were seeing all those jobs, manufacturing, everything heading overseas—including headquarters. So now they are the most optimistic in 20 years and [they are making], nearly 8 out of 10 manufacturers, are either making new investments, raising pay, or hiring more workers. All, again, early but very positive signs. But yeah at the end of the day this whole tax code was designed to drive wages up and create more opportunity for families.”