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Chairman Kevin Brady of House Ways and Means On The Coming Tax Bill

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Chairman Kevin Brady of House Ways and Means joined me this morning to discuss the tax bill that will be unveiled tomorrow:

Audio:

10-31hhs-brady

Transcript:

HH: My guest is Kevin Brady, chairman of the House Ways and Means Committee, Congressman from Texas. Happy Halloween, Congressman, good to have you with us.

KB: Well, Hugh, thanks for having me. But today, it’s not Halloween. This is the Astros win the World Series day.

HH: Well, I was going to ask if you’re going to be tweaking the tax bill tonight or watching the Astros in Game 6 at 8pm Eastern.

KB: Well, you know, one of the sacrifices I’ve made in this whole process is to be able to glance at the Astros games and not be just enthralled with them. So it’s been an exciting World Series.

HH: It has. But Mr. Chairman, it’s going 7, so you can skip tonight and finish the tax bill, because it’s going 7. And by the way, I told a Dodgers fan last night I feel their pain as an Indians fan from last year. They’re going to lose this thing to your Astros. Let’s get down to business. The indictments that came down yesterday consumed all of the aftermath of Speaker Ryan’s speech about tax reform. Are these indictments in any way, shape or form going to impact the bill?

KB: No. The answer is no. Look, everyone’s been, is laser focused on tax reform, and have bene since the beginning of the year since we have this opportunity with the Republican President, the House and Senate to deliver. So no, it won’t be a distraction.

HH: All right. Now number two, Tom Cotton was just on. The Senator from Arkansas wants you to raise revenue by repealing the individual mandate in Obamacare. The CBO estimates that would save $300 billion dollars over ten years. Is that on the table, Kevin Brady?

KB: Well, I don’t think it is, and here’s why. Look, I love these ideas from senators on health care, but what my constituents are looking at are for action on health care from our senators. The Senate has yet to pass the individual mandate. I’m still hopeful they can find a way forward. What I don’t want to do is to add things that could again kill tax reform like health care died over there. So I say focus on jobs and growth and leapfrogging America to the lead pack worldwide.

HH: So you think the repeal of the individual mandate would harm the bill’s chances?

KB: Well, it hasn’t passed out of this Senate, yet.

HH: But that’s the Obamacare massive repeal. This is just a laser-focus on the individual mandate.

KB: That would, well, even the skinny bill which had, you know, next to nothing in it, the mandate as well couldn’t muster 50 votes. So again, look, I want to see that individual mandate repealed. I just haven’t seen, no one has seen 50 votes in the Senate to do it.

HH: All right, let me then, we’ll move on. Maybe they’ll add it in the Senate. If they add it in the Senate, would you support it when the conference came around?

KB: Sure. Absolutely.

HH: Okay, so they can put it in the Senate bill and you would support it in…

KB: Absolutely. They’ve got a whole chamber over there to work on this.

HH: All right. Now let’s talk about your bill, which will be unveiled in all its glory tomorrow. What are the income thresholds for the brackets, Mr. Chairman?

KB: So we’re going to lay that out tomorrow. I don’t want to get ahead of the committee on here, but you’re going to see significant tax cuts up and down the line. You’re going to see a far simpler tax code than the one we have today. And the main focus, we’ve talked about this a lot, is it’s growing jobs, but growing paychecks as well, because look, this is all focused on growth. And it’s vaulting America back into the lead. That translates into higher paychecks.

HH: Does it have a fourth bracket, what you’ll be unveiling tomorrow?

KB: So we’re going to talk about that tomorrow.

HH: Oh, come on, Mr. Chairman.

KB: You know, look…

HH: Give me something.

KB: (laughing) There’s a reason, you know, the movie starts and you watch it. So…

HH: (laughing) Yeah, but there’s a trailer. There’s a trailer usually that gives you a little. Give me the trailer. Give me one…

KB: Okay, I walked into that one. I apologize. I walked into an easy one there. But let me just tell you this. Here’s what I can tell you. There is tax relief at every level. And we’re doing it in a way that people get, can keep more of what they earn regardless of where they live. And so this is in, in particularly as you move your way up the income scale, the tax relief comes because of growth, because workers succeed, because companies and local businesses succeed. So we’re got the incentives right where we want it – growth.

HH: Now I’ve been doing this since 1989, Mr. Chairman. If you don’t give me anyone, if you don’t give me any news, nobody’s going to read the interview. No one’s going to listen to it. so you’ve got to give me something. Just the top bracket number would be fine.

KB: So I can’t do that, but I can tell you this. When you walk down Main Street and you wonder are our local businesses going to make it, that mom and pop, that new company, that new startup, the ones who I think we hire so many of our workers, you’re going to see very strong relief for our small businesses and our local businesses to grow.

HH: Let me track a different tack. I’m trying to make a little news. Yesterday, you announced that property taxes would remain deductible. You actually gave that away yesterday, not to me, but to somebody else. My question is, is there going to be any relief on the income tax side of the state and local tax deduction?

KB: So the answer is no, and here’s why, because we have income taxes, reduced them across the board, and added the property tax, because our lawmakers in those high tax states really believe their families are being punished most by property taxes, which aren’t, look, they’re not based on your ability to pay. They’re just painful. And these high tax states, I don’t know how families make it with any of these crushing burdens. And so no, this property tax relief is really conditioned on members of Congress from high tax states who want to see that restored to the code.

HH: So you are, you’re doubling the standard deduction to $24,000. But if you pay income taxes greater than $24,000 dollars, isn’t that going to put you in the position, state income taxes and local income taxes, city of New York people, city of Los Angeles people, San Francisco, isn’t that going to put you in a position of opposing this bill if you pay more than $24,000 dollars in income taxes?

KB: No, because you get tax relief as well to offset those. And that’s the whole goal of simplifying this. Rather than people picking standard deduction or a complicated process, and everyone shifting dollars from different states and different communities, we have a simple process where instead of high tax rates, and everyone sort of subsidizing each other and trying to figure it out, why don’t we lower rates for everybody, and you just pay your own.

HH: But those rates are not yet determined. Will they corporate tax come down in 2016?

KB: In 2018?

HH: No, 2016, this year, immediately.

KB: Immediately? The answer is yes. We’re focused on getting growth now. Unless something changes in the interim, we’re focused on accelerating growth at this moment.

HH: So even the subchapter S people are going to get tax relief in 2016?

KB: Yes, after this bill passes. It’ll be, well, we’re in 2017.

HH: I mean 2017, not retroactive, 2017.

KB: Yeah, no, no, I thought, that threw me there for a minute, Hugh. So yeah, we’re going forward with growth immediately.

HH: All right, now when we look at this when it will, when they talk about phasing in the corporate reductions, what are they talking about?

KB: So I think that’s just a discussion about how do we get the greatest growth and the greatest tax relief for our local businesses in this ten years, this first ten years, and how to get the rates the lowest they can. So no decision’s been made. Well, decisions have been made. We’re waiting to lay this out tomorrow, and really eager to send the signal that this broken tax code, this era of un-competitiveness is over. As the President says, the era of economic surrender is over.

HH: Kevin Brady, have you shared this plan and its details with, say, Arthur Brooks at AEI, great economist, or John Taylor at the Hoover Institution, great economist? Have you gone outside of the Hill to get input?

KB: Well, yes, for the last six years, the Ways and Means Committee has relied on both those leaders, but more importantly, their associate organizations as well in shaping this. Not only that, look, our members have gone out and done thousands of town hall meetings, brought us back that input, sat down and worked through it. In fact, this tax bill will have the tax ideas from more than 50 lawmakers in the House, and many in the Senate, based on what they have heard in their communities and their main streets. And so this has very much been a ground up driven from Main Street type of tax reform.

HH: But hiding it until 11/1, bring it out after Halloween, means that people really don’t have a chance to assess it. And then you put it on the fast track.

KB: Well, everyone’s been able to talk about these key elements from the postcard to the low rates for businesses, and how you trade off for a simple postcard style system, you know, what don’t you have on there anymore in return for lower taxes. So the input’s been remarkable. But Hugh, I’ll say this, too. It doesn’t end when we introduce this bill. There’ll be a chairman’s amendment in the committee. We’ll continue the process on the House floor and the Senate. And every step, we’ll look to improve this tax reform bill.

HH: What does the chairman’s amendment aim to do? Is that when you get enough blowback on Part A, or enough support for a new idea that you amend it? Is that what happens?

KB: Exactly right. Or look, the tax code’s incredibly complex. So we’ll put out this tax. Families and businesses will look at it and say hey, you know, this doesn’t work, or did you forget this, or there’s a better way. And so yeah, we’re Republicans. We’re always looking to improve our product with every step. And so what’s laid out tomorrow is the first comprehensive tax reform in 31 years. And then listening and improving, we’ll move it forward.

HH: Will you, how long do people have between tomorrow and the chairman’s amendment?

KB: Well, there, we’ll move fairly swiftly, because we’re going to consider it in committee next week. Then, we’ll take it to the floor, and then over to the Senate. And so there are opportunities, legislative opportunities at each step to make this bill even better.

HH: But they basically get one week, don’t they, Mr. Chairman, then? If the chairman’s amendment is…

KB: Well…

HH: That’s what you’re going to take to the floor. They get a week to change the bill.

KB: Well, for the first step, going through committee, you know, we want to get at this. That should be a multi-day process and considering amendments and looking to further improve the bill. Then we’ll take it to the floor from there. So there is opportunity to improve this. And then of course, we have the Senate’s process as well. So input, Hugh, from my viewpoint, I never miss an opportunity, neither did Ways and Means members, to improve tax reform bills as they go forward.

HH: So Mr. Chairman, will you come back on this program on Thursday, Friday or Monday before the chairman’s amendment so I can have a chance to read it and then tell you what I think?

KB: Sure, I’ll be, look, if there’s any chance to do that, I’d love to do that, Hugh.

HH: Even if the Astros lose the World Series, you’ll come and talk to me?

KB: Well, I don’t know. Let me think about that one. Hugh, wait, here’s the good news. I won’t even have to worry about that.

HH: Okay, so you’re coming back on Thursday, Friday or Monday, because I want to see this bill.

KB: Yes, sir.

HH: All I got out of you was the answer is no, you are not, you are not limiting or postponing the deduction elimination for state income taxes, not eliminated, not postponed. Is that correct, Mr. Chairman?

KB: That’s correct. Yes, but we are restoring the local property tax deduction to help families.

HH: Got it. Got it. And there’s no cap on that?

KB: Yeah…

HH: There’s no cap on…

KB: To be determined.

HH: Ooh.

KB: We’re working through to make sure we focus that.

HH: Oh. So there might be a cap on the property tax deduction.

KB: Look, everyone’s speculating these days. We’ll know in 24 hours or so.

HH: All right. I look forward to talking to you before you go to that chairman’s amendment, Mr. Chairman. Have a great time watching the Astros tonight.

KB: Thank you.

HH: Thank you.

End of interview.

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