WASHINGTON INSIDER: Examining Tax Reform

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WASHINGTON (Gray DC) -- Gray Television Washington News Bureau Chief Jacqueline Policastro sits down with Rep. Kevin Brady in this episode of Washington Insider.

Rep. Brady, R-Texas, is the Chairman of the House Ways and Means Committee, and tax reform is his top priority.

Click play above to watch the full show. A copy of the transcript is below:

[SEGMENT 1]

JACQUELINE POLICASTRO (on camera): Welcome to Washington Insider. I'm Gray Television Washington Bureau Chief, Jacqueline Policastro. Today we're sitting down with Texas Congressman, Kevin Brady, chairman of the powerful House Ways and Means Committee. Right now, Brady is in the middle of crafting legislation that impacts the lives of every American.

JACQUELINE POLICASTRO (voice-over): Look familiar? Pages of tax returns. Many people dread filing their taxes with the Internal Revenue Service. But that could change. Lawmakers on Capitol Hill think your tax filing should fit on an index card. It's just one of the ideas they have as they try to reform our nation's tax code.

REP. MIKE KELLY (R-PA): This is so complicated right now. There's nobody out there that I think feels really comfortable doing their own taxes anymore.

JACQUELINE POLICASTRO (voice-over): The current tax code is more than 70,000 pages long. Republicans and Democrats agree it's confusing.

REP. RON KIND (D-WI): Got to simplify, simplify, simplify.

REP. TOM REED (R-NY): Simplify the code, make it fair, and make it competitive for the 21st Century.

JACQUELINE POLICASTRO (voice-over): The members of the House Ways and Means Committee are responsible for making that happen.

REP. JACKIE WALORSKI (R-IN): We're working on it 24/7. Ways and Means has three and four meetings a day now and that's all we're doing.

JACQUELINE POLICASTRO (on camera): This issue is the top priority for Congressman, Kevin Brady. He took over as head of the Ways and Means Committee in 2015 when he replaced Paul Ryan.

JACQUELINE POLICASTRO (to Brady): Your plan is to make filing taxes more simple. Other than filling out this index card, what else can Americans expect to see?

REP. KEVIN BRADY (R-TX): That's where we start. We decided early on, and the House Republicans have been working five years for this moment in history. Because we know it only happens once a generation. And so our goal is to create a tax code that doesn't just wring money from you. We've got that tax code. We want one built for growth. Literally designed from the ground up to grow jobs and paychecks in the US economy.

JACQUELINE POLICASTRO (to Brady): This is not only about how you file your taxes, but it's about the actual tax code. Will you change rates and what does this mean for all those special interest loopholes?

REP. KEVIN BRADY (R-TX): The tax code's so complex and every American knows it's unfair, because it's filled with lobbyist loopholes and special provisions for some, exemptions for others. Our approach is to simplify the code. We believe rather than keep tax rates high, as they are today with lots of special provisions for a few, why don't we lower the rates for everybody and get rid of those special exemptions? Why don't we create fairness and simplicity? Imagine that you and I know exactly what deductions our neighbors have, because we have the exact same ones. It creates a simplicity and a fairness we haven't seen in a long, long time.

JACQUELINE POLICASTRO (to Brady): You want to cut in half the tax rates on personal savings and investments. What will this mean for middle class Americans?

REP. KEVIN BRADY (R-TX): It's really important ... we're not a nation of savers and we should be. Why doesn't tax code reward and encourage people at every stage in their life to save more? We cut the rates in half for the earnings you get from savings, turns out it's incredibly pro growth for the community. If you reward savings and investment, whether it's in local business or in dividends or stocks that way, you really grow the US economy as well. That's one of the provisions that almost no one is paying attention to that I think may be the second-most pro-growth in this whole proposal.

JACQUELINE POLICASTRO (to Brady): I want to talk a little bit about the reality of getting this done. Republicans control the House, the Senate, and the White House. Why is this still a difficult job?

REP. KEVIN BRADY (R-TX): It is incredibly. Tax reform is labeled as the greatest challenge of any generation, because the codes not just complex, it's got a lot of constituencies who don't care overall about the tax code. They just want to protect their specific provision. We challenge all that by going very bold and going very simple. It's natural to have that pushback. I agree with President Reagan when he said, "One of the greatest enemies is the status quo." People just want to keep, in Washington, want to keep things as they are. Folks back home want to see bold changes.

JACQUELINE POLICASTRO (on camera): Changing the tax code isn't only about making it easier for you to file your taxes, it's also about growing the economy.

PRESIDENT TRUMP: Making it easier for companies to do business in the United States. And much, much harder for companies to leave our country.

JACQUELINE POLICASTRO (voice-over): Who the administration says will be impacted most when Washington Insider returns.

[SEGMENT 2]

JACQUELINE POLICASTRO (on camera): Welcome back to Washington Insider. I'm Jacqueline Policastro. We're talking to one of the most powerful men in Congress, Texas Congressman Kevin Brady. As Chairman of the House Ways and Means Committee, Brady is leading the effort to reform the tax code. It's something President Trump wants to see happen. The President talked about it during his speech to Congress in February.

PRESIDENT TRUMP: Right now, American companies are taxed at one of the highest rates anywhere in the world. My economic team is developing historic tax reform that will reduce the tax rate on our companies so they can compete and thrive anywhere and with anyone. (applause) It will be a big, big cut. At the same time, we will provide massive tax relief for the middle class. We must create a level playing field for American companies and our workers. Have to do it. (applause)

JACQUELINE POLICASTRO (on camera): Two months later in April, Treasury Secretary, Steven Mnuchin, announced the administration's tax reform plan.

STEVEN MNUCHIN: The biggest tax cut in history and most significant tax reform. And this is all about creating jobs for American workers. Making business competitive, lowering the business rate, making sure that small and medium size businesses can take advantage of it, which are the engine of growth in this country. And it's about creating middle income tax cuts. This is all about jobs and economic growth.

JACQUELINE POLICASTRO (to Brady): When it comes to your tax reform plan, how involved is the White House?

REP. KEVIN BRADY (R-TX): Deeply involved. The president has assigned his tax team to work with the House and the Senate to unify behind one tax reform plan. I think that's critical and a very important step, because it forces us to work together, to work through these very big and bold issues. To bring it to Congress as unified plan, and it increases the likelihood that we get it done this year. Because I don't know about you, but our families, our local businesses, they're starved for a different tax code, they're just so tired of what we have today. We want to fulfill that promise.

JACQUELINE POLICASTRO (to Brady): The US has one of the highest corporate tax rates in the world. Along with the president, you want to lower those rates. What's your response to people who think that it's just helping big business?

REP. KEVIN BRADY (R-TX): It's not. It is helping people who work whether you're at a small business, a medium size or large business. Here's the problem. Our rates are so high, our businesses continue to leave the country, good jobs continue to leave the country. And businesses send more money to Washington and invest less in their own workers and success at home. We propose a greater than 40% rate cut, whether you're the biggest company in America or the smallest mom-and-pop, so you can invest more locally. We think that not only makes us competitive as a country, it really encourages growth at the community level.

JACQUELINE POLICASTRO (to Brady): What kind of economic growth would our country see under your tax reform plan?

REP. KEVIN BRADY (R-TX): It's under the House Republican Blueprint that is exactly one year old at this moment. The Tax Foundation, independent group, estimates it will grow the US economy by over 9%, more importantly, it will grow wages by nearly of 8%. That means a family of four with $5,000 more in after tax wages. That's really important. And create about two million new jobs. But I think the most, maybe equally important, it will vault America from 31st in the world to number 3. That means going forward, we'll be one of the best places on the planet for that next new job, that next new manufacturing plant, that new research facility.

JACQUELINE POLICASTRO (to Brady): Have you thought about what that means if we don't pass tax reform. What kind of growth could we expect?

REP. KEVIN BRADY (R-TX): We're stalled out right now. Every economist says America's economy will grow at less than 2% as far as the eye can see. To put in perspective, that's half of what we've been growing for the last half a century, that's less than European growth. America's never seen that type of slow growth. It's not acceptable. We have to change our tax code to really ignite businesses investing in their community and in their company and make us competitive again.

JACQUELINE POLICASTRO (to Brady): You're pushing for border adjustment. That means taxing imports. There's this map on your website, and it shows that the United States is one of the very few countries across the globe that doesn't do this. Why is it important?

REP. KEVIN BRADY (R-TX): We need to keep more US jobs from leaving America. More importantly, we want to create the environment where companies start bringing their manufacturing jobs and their research jobs back to America. To do that we have to compete. We propose ... we know what China and Europe and Canada and Mexico do beat us, they have lower rates. We go right after them then. They no longer tax worldwide, we match them there. But they border adjust, so they take their vat tax off their products heading into America and they slap a tax onto our made in America products when it comes into their country. All of our competitors do this, very few don't. Us, Cuba, North Korea, sort of the neighbors you don't want to be like. We propose for the first time, to border adjust. It means this: we will no longer tax made in America products when they're sold around the world, so they can compete anywhere in the world and win. But as importantly, those products that come into America, for the first time will be taxed equally with made in America products. It doesn't matter where they're produced, doesn't matter who produces them, foreign products will no longer have a tax advantage over made in America products, and it's incredibly pro growth here in the United States.

JACQUELINE POLICASTRO (to Brady): Even though everyone else is doing this, your Republican colleagues are giving you a hard time on this one and so are a lot of businesses. What's your plan to address that?

REP. KEVIN BRADY (R-TX): It is a bold change from where we're at. The thought of taxing everyone equally in the United States, regardless of where these products are from is a big change from what we have today. We've gotten, I think, legitimate concerns in some cases, for those who import a lot of foreign products. Listening to them, we've proposed a very deliberate five-year phase-in, so that there will be no impact on consumers, no impact on tax rates. In fact, what we now have as a result of this discussion on border adjustment, for the first time, we have whole industries coming in, telling us they can bring back key parts of their supply chain for American. First time, they can bring their plants back to America because the tax code that used to say move it overseas now says this is the best place. I think that's important.

JACQUELINE POLICASTRO (on camera): Democrats say they want a fair and simple tax code too. But what do they really think about the Republicans plan?

REP. RON KIND (D-WI): Something as big as tax reform is going to require some bipartisan cooperation.

JACQUELINE POLICASTRO (voice-over): What one Democrat on the Ways and Means Committee says he doesn't want to see happen. Next on Washington Insider.

[SEGMENT 3]

JACQUELINE POLICASTRO (on camera): Welcome back to Washington Insider. Here is something Democrats and Republicans agree on. They want to make the tax code fair and simple, but they don't exactly see eye to eye on how to make it happen. Lawmakers on the House Ways and Means Committee are working to come to any agreement. Wisconsin Congressman, Ron Kind is a Democratic member of the committee. He says he isn't happy with what he's seeing from his Republican colleagues so far.

REP. RON KIND (D-WI): We haven't seen their plan yet, and that's problematic. I think we do need more hearings in order to hear from people from the various viewpoints that are out there. We have to continue talking to each other. I hope they don't take the same approach that they took with healthcare reform, which was closed door meetings, no public sunshine on the legislation until the night before it was on the House Floor...What I don't want to see, however, is just more trickle down economics, tax breaks at the very top, hoping that will trickle down and benefit everyone underneath. I think that experiment has been tried and it's failed.

JACQUELINE POLICASTRO (on camera): Will Republicans listen to Democrats concerns? We ask the Chairman of the committee, Congressman Kevin Brady.

JACQUELINE POLICASTRO (to Brady): Are you including Democrats in these talks? Some Democrats on the committee say that they feel left out.

REP. KEVIN BRADY (R-TX): We are. We've reached out to Democrats, both on the Ways and Means Committee and centrist Democrats in the House, as well as labor unions as well. Asking their input, asking if they want to be involved in this. I think they've got terrific ideas, because their communities are seeing the same young people who can't find good jobs. They're seeing companies continue to move overseas. We would love ... I would love to have bipartisan support. We'll see how this works out, if we're able to work together, that'd be my first preference.

JACQUELINE POLICASTRO (to Brady): When it comes to your Democratic colleagues, what kind of pushback are you getting?

REP. KEVIN BRADY (R-TX): Democrats, generally, have said their priorities are they too want to get the economy going. They're concerned about tax breaks for the wealthy. They want to make sure that this is balanced within the budget, and they focus an awful lot on income inequality. One of the points I like to make is that the current tax code encourages income inequality. It doesn't create enough good-paying middle class jobs, it doesn't give enough young people opportunities, so the gaps widen. If we make it simple, we make it bold, we really ignite the economy, we're going to see good things for the middle class. Certainly, more opportunities to move up that economic ladder.

JACQUELINE POLICASTRO (to Brady): Do you feel like you have to wait for health care to finish up before you can take this on?

REP. KEVIN BRADY (R-TX): We're running a parallel track, we've continued to work on tax reform as we've worked through healthcare as well. I think it would be incredibly helpful, first, because health care would take a trillion dollars of tax hikes that land on you and me and anyone who has got insurance or runs a local business. It would be good to get that out to the economy. I think that's important. Secondly, it helps set the stage for passing a budget and ultimately tax reform. I think it would be incredibly helpful.

JACQUELINE POLICASTRO (to Brady): What's the time line for this? Do you plan to get it done before the end of the year?

REP. KEVIN BRADY (R-TX): We do. We've set 2017 as the year for tax reform. And given that it's been 31 years, that's an ambitious schedule, but it's achievable. That's what the president, the House and Senate have set for the timetable, and right now, we're on schedule to meet that goal.

JACQUELINE POLICASTRO (voice-over): Next on Washington Insider, Chairmen Brady is a proud Texan. What you'll find from the Lone Star State inside his Capitol Hill office.

[SEGMENT 4]

JACQUELINE POLICASTRO (on camera): Welcome back to Washington Insider. I'm Jacqueline Policastro. We're talking to Texas Congressman Kevin Brady about tax reform. Before we get back to the interview, Brady takes us on a tour of his Ways and Means Committee office. This is where members meet to talk about big issues like Social Security, Medicare, and taxes.

JACQUELINE POLICASTRO (to Brady): Mr. Chairman, you're one of the most powerful members of Congress. What was it like when they put your name on this door?

REP. KEVIN BRADY (R-TX): It was very exciting. As the third Texan in history to be able to lead the committee, Bill Archer's name was on that door when I first came to Congress, and so it's a great honor because you can make such a difference in people's lives.

JACQUELINE POLICASTRO (to Brady): You brought Texas to your office. Tell me a little bit about this.

REP. KEVIN BRADY (R-TX): I did. When I was named chairman, I thought immediately of Sam Houston whose museum and his burial place is in Huntsville in our District. Sam Houston was a remarkable figure, Governor of Texas and Tennessee, first and third President of Texas, a US Senator. Could easily have been President of the United States and so I asked the museum if I could bring Sam back to Washington to be part of this historic room.

JACQUELINE POLICASTRO (to Brady): The Lone Star State. You've got a Texas flag in here. Tell us about that.

REP. KEVIN BRADY (R-TX): I'll tell you what. I was proud to be able to bring the Lone Star Flag into the Ways and Means room as Chairman, it's and inspiration every day. It reminds me of why I'm here. I didn't move to Washington, I live back home in Texas. The values we have in our state of personal responsibility, low taxes, encouraging businesses to grow and hire more workers. That's the type of thinking I bring to Washington.

JACQUELINE POLICASTRO (to Brady): As chairman of the Ways and Means it's really what you're in charge of implementing too.

REP. KEVIN BRADY (R-TX): It really is. Texas is never far from me here.

JACQUELINE POLICASTRO (to Brady): You were picked by Paul Ryan and your Republican colleagues to lead this committee. What is it like following in the footsteps of some of the individuals here?

REP. KEVIN BRADY (R-TX): It is remarkable. The committee is the first and oldest committee in Congress, has remarkable powers, again, to change lives. But in history there have been eight members of the Ways and Means Committee who have gone onto become president, including Andrew Jackson and James Madison, and, of course, George H. W. Bush from Texas. The committee has also produced eight vice presidents and 21 Speakers. It has this great history of making a difference in the country.

JACQUELINE POLICASTRO (voice-over): Brady says he's trying to make a difference in the lives of every American by reforming the tax code. It's something that hasn't been done for more than 30 years and it's no small task.

JACQUELINE POLICASTRO (to Brady): What are the consequences if tax reform doesn't happen?

REP. KEVIN BRADY (R-TX): We're focused on this because I think families are starving for a simpler tax code. In my Town Hall Meetings ... because I ask them, would you be willing to do away with a lot of special provisions to have a simple low rate tax code and they say, "Yes, go this direction." Local businesses, after too many years, feel like Washington just put a burden on them. They're now optimistic about the future, and if we can conclude tax reform, and we will this year, we're going to give them the confidence to get moving again. To start hiring again.

JACQUELINE POLICASTRO (to Brady): Chairman Brady, thanks so much for your time. We appreciate it.

REP. KEVIN BRADY (R-TX): Jacqueline, thank you.

JACQUELINE POLICASTRO (on camera): The process of tax reform can be as complicated as the tax code itself. Will Republicans include Democrats ideas? Will Democrats make concessions to the party in power? And what will it all mean for the economy? Lawmakers say, "Now's the time for action." Congressman Brady plans to make tax reform a reality by the end of the year. I'm Jacqueline Policastro. Thanks for watching.

[SHOW END]

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