The GOP tax bill needs some fixing. The massive tax cut, rushed through Congress late last year, includes “a host of errors and ambiguities … that businesses big and small are just now discovering and scrambling to address,” write Jim Tankersley and Alan Rappeport in The New York Times.
Some of the issues can be addressed through Treasury Department clarifications, but others will require legislative action by Congress. Among the issues that have been raised so far by groups lobbying for changes:
Multinational Corporations Want More Clarity — and More Tax Breaks: The U.S. Chamber of Commerce last week released a list of tax issues requiring regulatory clarification that it sent the Treasury Department. The list included a number of recommendations about provisions in the law meant to crack down on companies using foreign subsidiaries to reduce their U.S. tax bills. But companies worry about how far-reaching and costly those provisions might be.
The ‘Grain Glitch’: The legislation allows farmers to deduct 20 percent of their total sales to cooperatives. “This allows farmers to deeply reduce their tax bills, but it has caused an uproar among independent agriculture businesses that say they can no longer compete with cooperatives, since farmers would choose to sell to cooperatives to take advantage of the more generous tax break,” the Times reports. Independent grain companies have lobbied Congress for a fix, warning that the provision makes it impossible for their businesses to compete with the co-ops.
Tax Breaks for Restaurant and Retail Renovation: A drafting error requires businesses making renovations or property improvements to depreciate those investments over 39 years rather than the intended 15 years. “It is our understanding that it was an honest mistake,” an executive at the National Restaurant Association told the Times. “The bipartisan intent behind the law was a 15-year depreciation period, and we are confident Congress will have this resolved quickly.”
It may not. Any legislative fixes would require Democratic votes to pass the Senate, and Democrats could look for more substantive changes to go with the technical corrections in exchange for their support. “I’m willing to make technical changes, but they have to be substantive, too,” Sen. Sherrod Brown (D-OH) told the Times. “We’re not just going to sit down and fix the things they did badly because they did it in the dead of night with lobbyists at the table.”
Writing in The Washington Post, economist Jared Bernstein suggests a number of ways Democrats could use their leverage, including demanding a DACA fix that gives so-called dreamers permanent status, significant expansion of the Earned Income Tax Credit, making the Child Tax Credit fully refundable, raising the federal minimum wage and the development of federally subsidized jobs programs.