April 12, 2017 / 9:35 PM / 2 years ago

U.S. tax reform debate moves away from Ryan blueprint

WASHINGTON (Reuters) - U.S. House Speaker Paul Ryan’s tax reform blueprint appears to be losing its status as the likely framework for the first major tax overhaul since 1986, with rival approaches emerging from the White House, Senate and other quarters in Congress.

FILE PHOTO - Speaker of the House Paul Ryan and Office of Management and Budget director Mick Mulvaney arrive for a meeting about the American Health Care Act on Capitol Hill in Washington, D.C., U.S. March 23, 2017. REUTERS/Aaron P. Bernstein/File Photo

Congressional aides, lobbyists and analysts say the changing focus could delay passage of a tax bill until late 2017 or 2018, potentially foiling Republican efforts to score a legislative victory for President Donald Trump by August, following last month’s failed bill to repeal and replace Obamacare health insurance.

Like the healthcare bill, the House Republican tax blueprint stems from Ryan’s “A Better Way” legislative agenda launched during the 2016 election campaign.

“The House can go and do what they want to do. We are going to formulate our own policies,” White House budget director Mick Mulvaney told CNBC in an interview posted on the channel’s website on Wednesday. “You will have a White House, Donald Trump tax plan that we are going to take down to the Hill and try and sell.

In the meantime, Senate Republicans are expected to review a 2015 tax package from former House Ways and Means Committee Chairman Dave Camp, as a starting point for their own tax legislation.

Members of the House Freedom Caucus, a bloc of conservative lawmakers that helped derail Ryan’s healthcare bill, have also suggested that expanding the deficit to stave off adding new taxes could be acceptable.

“The blueprint was the Republican ideal, written as a campaign document. Now they’re dealing with the realities of a closely divided Congress and a president who wants a win on this key, signature issue,” said one business lobbyist, who spoke on condition of anonymity.

But Ryan is not giving up on the idea of forging agreement with the White House and Senate leaders.

“Our intention has always been and continues to be to coalesce around a unified GOP plan and those conversations continue,” said his spokeswoman, AshLee Strong.

Business lobbyists and tax experts warn that a loss of focus could prove fatal for the tax overhaul effort, if the House blueprint disappears from the political stage.

“Right now the blueprint is the only plan we have. There’s a great amount of uncertainty about how this would play out without it, or whether this would play out at all,” said John Gimigliano, who heads federal legislative and regulatory services for the accounting and consulting group KPMG LLP.

Lawmakers on the House Ways and Means Committee say the blueprint’s viability could become clearer next month, when the committee is expected to hold a series of public hearings and hopes to see a floor vote before the August congressional recess.

Treasury Secretary Steven Mnuchin met this month with a bipartisan group of House lawmakers about possibly including infrastructure spending in an administration tax package, a feature that is not part of the blueprint.

The House blueprint, which Ryan rolled out last June, would bring sweeping change to the U.S. tax code by slashing business tax rates by 15 percentage points, allowing companies to immediately write off capital investments and ending taxation of foreign profits of U.S.-based multinational corporations.

But its future has become clouded by mounting opposition to two provisions that would raise a combined $2.4 trillion to pay for those tax changes: a border adjustment tax, or BAT, that includes a new 20 percent import tax and the elimination of business deductions for interest payments.

Advocates of Ryan’s plan say it would generate revenues that would help Congress avoid paying for tax cuts by expanding the national deficit.

Reporting by David Morgan; Editing by Julia Edwards Ainsley and Lisa Shumaker

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