WASHINGTON, D.C. — U.S. Rep. Kevin Brady, R-Texas, will lead the conference committee of both U.S. House and Senate members tasked to create one bill from two different versions of tax reform passed recently.
Brady said he was honored to be picked for the position, which holds its first meeting today.
“Both the House and Senate have put their best ideas forward, and I believe we can do even better,” he said. “There will be changes, and we will have to find common ground, but we are on schedule to deliver tax reform to the President’s desk for the first time in 30 years.
“We just can’t keep with the current code,” he said. “Jobs are moving overseas, kids can’t find jobs. Many paychecks have been flat for decades. We can’t settle as a country with 2 percent growth or less.”
Key differences in the two recently passed measures center mainly around specific deductions, including medical expenses, tuition waivers, state and local taxes and items for teachers.
“In the House, we focused on the postcard style of tax return, where there are five to seven deductions that are important to families — keeping the mortgage deduction and the charitable deduction, doubling the child tax credit and expanding the scope of the deduction,” he said. "We stripped the tax code down to what’s important today — issues such as medical expenses and the adoption tax credit, and allowing companies to offset child care costs.”
He said that for families , there will be a medical expense deduction, keeping the one that’s in place.
“Since the Affordable Care Act, more people have seen skyrocketing out-of-pocket costs,” he said. “Many lawmakers like that approach.”
Both houses included tax relief for small businesses; however, Brady said he thinks they can do better, forging a tax plan to make companies competitive, and providing breaks for small businesses.
The congressman lamented the perpetuation of half-truths and incomplete information being put out in the media and social sites.
One such issue affected teachers: while the teacher tax credit of $250 has been removed, it should be offset by the fact that teachers will get anywhere from $1,100 to $2,000 in tax relief each year, Brady said.
Another such issue is tuition tax waivers,
“Outside the universities, this issue has been controversial as it treats students differently,” he said. “We looked at the code, and asked why people aren’t being treated equally. But we’re listening, and this is treated as important, but no decisions have been made on that provision.”
However, Brady said that by eliminating special provisions in the tax code, you can lower rates for all students, and it gets the economy going so students have a better-paying job when they graduate.
Brady said lawmakers haven’t reached a decision on eliminating the Affordable Care Act’s individual mandate in the new tax bill, but said he feels there is a lot of support in the house to do just that.
“It is a tax on many low- and modest-income families who can’t afford the Obamacare plans and the out-of-pocket costs,” he said. “There’s a challenge there, and this is under consideration.”
Other key differences, particularly in the House bill, provide for the eventual elimination of the inheritance tax and private activity bonds.
“Private activity bonds are included in Senate, but eliminated in House bill,” Brady said. “They were originally created to build infrastructure of national interests, but now have drifted into other areas, such as charter schools, hospitals, low-income housing, wineries and offices — a lot of projects that many would argue are far afield from the original intent. I believe these need to be refocused, and need reform.”
PABs are an example of special interests diving into tax reform, he said, and while there is a role for the bonds in infrastructure, they need to be focused more.
Additionally, Brady said that that state and local tax deductions were in essence a punishment on lower income families, which is why it was left out of the House bill.
“It does create challenges for high-tax states such as New York and California, because they tax their citizens at stunningly high levels,” he said. “We’re having discussions with lawmakers from those states to make sure we get tax relief for everyone.”
Brady said he also feels strongly about eliminating the death tax, or inheritance tax, which was not included in the Senate version of the bill.
“The death tax is the No. 1 reason our family-owned businesses and farms in Texas aren’t passed down to the next generations,” he said. “We have families, like the Snooks outside Livingston, who have had to pay the death tax three times just to keep their own farm. It’s unfair and wrong.”
Brady said the inheritance tax is hitting minority- and women-owned businesses, families that are building wealth for the first time, so the House bill eliminates it in seven years, as opposed to the Senate, which just raises the exemption.
“Eliminating the death tax creates 144,000 jobs in the country, mainly by business spending money on finding ways to eliminate the death tax and allowing them to invest back into their local farm or business,” he said.