By Richard Rubin
WASHINGTON -- Senate Finance Committee Chairman Orrin Hatch says he has questions about House Republicans' border-adjustment tax plan, but stopped short of rejecting or embracing it.
Mr. Hatch, a Utah Republican, said he doesn't intend to oppose or ignore the plan being written by House Ways and Means Chairman Kevin Brady (R., Texas). But he also said the Senate wouldn't simply rubber stamp the House plan, and his comments signaled anew that the tax policy debate in 2017 will be complicated and lengthy, even though Republicans have control of Congress and the White House.
"I'm not trying to be coy, and I'm not playing hide-the-ball with my opinions," Mr. Hatch said in a speech Wednesday morning at the U.S. Chamber of Commerce.
The House plan would prevent companies from deducting imports and let them exempt income from exports. Many economists say that border adjustment would drive up the dollar and cause little, if any, damage to importers on balance.
The proposal -- part of a larger plan to revamp the tax code for the first time since 1986 -- has kicked off an intense lobbying fight. Big retailers, oil refiners and some senators are wary of the plan. They think the economic shift could be rocky and that the currency adjustment might be incomplete, driving up consumer prices on imported goods.
Nonetheless, House Republicans, including Mr. Brady and House Speaker Paul Ryan (R., Wis.) have pressed ahead. The border adjustment would provide $1 trillion over a decade to offset the budgetary cost of reduced tax rates and limits tax-avoidance techniques companies have used to shift profits out of the U.S.
Mr. Hatch said he wanted toknow more about who would bear the burden of the tax plan, whether border adjustment is consistent with international trade rules, and whether there are specific industries that would be unduly harmed.
"We don't have definitive answers to any of those questions at this particular point," he said.
Republicans have a 52-48 majority in the Senate and Mr. Hatch noted that slim margin and the likely difficulty of getting a bipartisan deal on tax policy. Already, GOP senators such as Mike Lee of Utah and David Perdue of Georgia have criticized border adjustment.
"I'm simply saying that a major concern on tax reform is producing a bill that can get through the Senate, and that is likely going to require a separate Senate tax reform process, which will almost surely end up looking different from what passes in the House," Mr. Hatch said. "And, once again, that's not a bad thing."
It is still early in the process. The House hasn't even released a draft bill yet. Mr. Hatch emphasized areas where Republicans agree on tax policy -- in their preference for lower marginal rates, fewer tax breaks and a comprehensive approach that addresses individual and business taxes together.
Mr. Brady, in a statement on Wednesday, said he sees a "historic opportunity" to work with Mr. Hatch, the Senate and the White House to revamp the tax system and reiterated his support for border adjustment
"None of us is satisfied with the current tax code that favors foreign products over American products, and chases U.S. jobs overseas," he said.
Write to Richard Rubin at email@example.com
(END) Dow Jones Newswires
February 01, 2017 12:15 ET (17:15 GMT)
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