Washington, DC – Miller & Chevalier Chartered and the National Foreign Trade Council (NFTC) today announced the results of their 2017 Tax Policy Forecast Survey, which reveals for the first time in 11 years significant optimism for comprehensive tax reform from leading tax executives at U.S. and foreign-based companies.
“The Republican sweep of the 2016 elections combined with continued work on the proposal released by the House Republican Tax Reform Task Force in June of 2016 has our respondents more confident than ever before that comprehensive tax reform will be enacted,” said Miller & Chevalier Member and Tax Department Vice Chair Marc Gerson, former majority tax counsel to the House of Representatives Committee on Ways and Means. “Nevertheless, our respondents are still uncertain as to the net impact of a comprehensive tax reform package on their businesses in light of the significant revenue-raising provisions, such as the border adjustment tax, that are being considered.”
Respondents believe President Trump will play a larger role in influencing tax policy than they expected President Obama would in previous years. In 2016, President Obama was seen as a distant third behind Speaker of the House Paul Ryan and House Committee on Ways and Means Chairman Kevin Brady. This year, President Trump scored near-equal to Speaker Ryan and higher than Chairman Brady.
Respondents this year also believe it is no longer a question of if tax reform happens, but when. When asked in January what they think the Trump Administration’s top priorities will be for 2017, respondents said repealing and replacing the Affordable Care Act would be the top priority. However, in light of the failed House attempt to pass the American Health Care Act in late March, comprehensive tax reform appears to have moved up the agenda.
“Now that the health care debate has been set aside, tax reform is the top legislative priority of both Congress and the Administration,” said Cathy Schultz, National Foreign Trade Council Vice President for Tax Policy. “We are hopeful that this renewed focus will result in a comprehensive tax reform package getting over the finish line.”
• 42 percent of respondents expect 25 percent to be the top corporate tax rate – 5 percentage points higher than proposed in the Blueprint. This suggests some skepticism that Congress will be able to enact a rate as low as 20 percent.
• A third of respondents expect 33 percent to be the top individual tax rate. This is consistent with the Blueprint, which suggests respondents have faith that Congress can reduce the top individual rate to that level.
• Not surprisingly, a third of respondents said Republican control of both chambers of Congress will be the factor that most positively impacts tax policy in 2017. However, 26 percent of tax executives still see the lack of bipartisan support as the greatest impediment to reform. Republicans do not have a filibuster-proof majority in the Senate, and while reconciliation is a possibility, it comes with limitations. Some respondents may think that a bipartisan effort, similar to the successful effort in 1986, will be necessary.
• 22 percent of tax executives say the most important measure they are watching with respect to reform is the border adjustment proposal in the Blueprint, followed closely by an insufficient reduction in the statutory rate (21 percent) and limits on interest deductibility (20 percent).
About the NFTC
Serving America’s Global Businesses Since 1914– The National Foreign Trade Council (www.nftc.org) is a leading business organization advocating an open, rules- based global trading system. Founded in 1914 by a broad-based group of American companies, the NFTC now serves hundreds of member companies through its offices in Washington and New York.
Marc Gerson, Vice Chair, Tax Department, Miller & Chevalier, 202.626.1475
Catherine Schultz, Vice President, Tax Policy, National Foreign Trade Council, 202.887.0278, ext. 2023
Aggie Howland, Media Relations, Greentarget, 312.252.4114