Not long after House Speaker Paul Ryan offered a full-throated affirmation of his tax-overhaul plan, an influential conservative group announced a grassroots campaign against it and a Senate leader said a key part of the proposal is “on life support.”
Senate Majority Whip John Cornyn was diagnosing Ryan’s plan to replace the U.S. corporate income tax with a new, “border-adjusted” levy on U.S. companies’ domestic sales and imports. The proposal has stirred sharp divisions among businesses: Retailers, automakers and oil refiners that rely on imported goods and materials oppose it, while export-heavy manufacturers support it.
So far, the opponents are winning, based on interviews with lawmakers, lobbyists and tax specialists. As Congress prepares to depart Washington for a one-week break, Cornyn said he didn’t see the votes lining up for the House leaders’ plan.
“The hard reality is the border tax is on life support, and given the imperative of 51 senators and 218 House members and one president, I think we need to look for other options,” he said.
Some House Republicans have already expressed reservations about the plan. And President Donald Trump, who has promised to produce the outline of his own “phenomenal” tax plan within weeks, hasn’t taken an official position on border adjustability. Without Trump’s enthusiastic support, the plan’s opponents have a distinct advantage, according to several lobbyists on either side of the issue, who asked not to be named because of the issue’s sensitivity.
‘Existential’ Issue
During a news conference Thursday, Ryan acknowledged the difficulty of steering the proposal, which is nothing short of a complete rewrite of U.S. corporate tax policy. But he said a tax overhaul is vital to ensuring America’s economic health. “We are doing tax reform. Tax reform is going to happen,” he said, acknowledging his forceful tone. “You got me going on tax reform. Sorry,” Ryan said.
“This is existential to our economy, and we know this,” he told reporters. “And so we’re going to get tax reform done and there’s going to be a whole bunch of drama. You’re going to enjoy covering it between now and then.”
Less than two hours after he spoke, some of the drama unfolded. Americans for Prosperity, a conservative advocacy group that opposes the border-adjusted tax plan, announced a campaign that will focus on members of Congress’s tax-writing committees. The group, which was founded by billionaire brothers Charles and David Koch, has traditionally supported Ryan.
Political Costs
Brent Gardner, AFP’s chief government affairs officer, suggested the issue carries potential political costs for the House speaker.