The White House and Republican Leadership released a joint statement on tax reform on July 27. While short on many policy specifics, it made clear that the border adjustable tax (BAT) would not be considered as part of tax reform.
The tax-writing committees will now begin the effort to produce legislative text, which they hope to have ready this fall.
During August, President Donald Trump is scheduled to barnstorm the Rust Belt states to aggressively campaign for tax reform. Conservative grassroots organizations also plan to conduct their own media blitz to energize their membership.
The Senate Finance Committee heard testimony from former assistant secretaries of Treasury for tax policy. Two of the witnesses counseled against ending the interest deduction in response to a question from Sen. Portman (R-OH).
During discussion of the appropriate application of a lower rate for pass-through businesses, Sen. John Thune (R-SD) noted the need to treat income to pass-through owners similarly to c-corp owners who also receive compensation for services. Witnesses generally agreed that the current reasonable-compensation rules are inadequate. One suggested option was to only allow the lower rate based on the proportion of capital invested by active business owners. Another option was to set a fixed percentage of business income that would be eligible for the lower rate. (Previous tax reform efforts have recommended 30%.)