Himes talks revising corporate tax code
While health care, immigration reform, the recent travel ban have been topics that grab the headlines lately, the corporate tax code has been a priority for U.S. Rep. Jim Himes, who alluded to the need to have an honest, frank discussion about where simplification in the tax code really needs to take place at a recent reporters’ roundtable.
“There’s a lot of common ground but it’s a really heavy lift. The reason it’s a heavy lift is because all those breaks, credits, deductions, exclusions, provide value to somebody. And that somebody probably has a lobbyist whose job it is to keep that benefit in the code. I make a lot of fun of people who say people say this is all about people who fly private jets and drill for oil. Those happen to be tax benefits, but, if we’re going to be honest, the biggest deductions and credits in the tax code are around the mortgage interest tax deduction, are around the deductibility of health care,” Himes said, adding that we need to “realize that if you’re going to simplify the code, you’re going to step on a lot of toes.”
Treasury Secretary Steve Mnuchin has said he wants to see significant tax reform before the August recess, which Himes called, “wildly optimistic.” Himes added, “There is broad agreement on both sides of the aisle that you should have simplification, that things like corporate tax rate is too high. We have a corporate tax scheme where the highest rate is the highest in the world, but there’s all kinds of deductions and credits that companies take advantage of by hiring huge tax departments. That’s inefficient.”
Beyond tax reform, Himes addressed the budget proposals that have been laid out by President Trump in recent weeks. Trump is acting on a campaign promise to build up the military by sending them $54 billion dollars, while cuts elsewhere including the state department and the EPA will account for the money.
“It’s not clear you make our military a lot better by throwing a whole lot more money at it. We’ve got an extraordinary military as is, and they show this every single day. It’s just not clear to me that we’re a whole lot of safer if we throw another $50 billion at $700 billion. That’s pentagon plus, cia, nsa, all security spending, which is a multiple of what our enemies spend. It is clear to me that if you gut our soft power, our diplomacy, you damage your national security. Not to mention the EPA, which keeps Long Island Sound clean and keeps our air clean. So I think this idea of an immense amount of money on our defense at the expense of things like the EPA is a bad idea,” Himes said.
While federal budgets and tax code are federally focused issues that have been dominated headlines of late, the effort to grow the state economy also came up. Himes echoed his goals of improving infrastructure and tax codes as a way to accelerate that growth.
“Let me go right back to infrastructure. When you talk to people who run businesses in this area, somewhere on their list of top things that are a real pain in the neck for them is that they can’t their employees to get to work. A junior level employee here in Stamford needs to live up beyond Shelton to afford housing, so that means they’re spending over an hour in traffic to get to work. So that’s something we can move the needle on. We’re hitting singles and doubles. Norwalk bridge is going to get rebuilt, progress is being made on rail lines generally, so that’s one,” Himes said.
Himes also agreed with his colleagues across the aisle on the need to streamline regulations in Connecticut.
“I hear from a lot of small business people that there’s just a lot of duplicative regulations, so I won’t be partisan. Republicans have a point there in certain areas,” Himes said.
At the center of it all, however, is tax reform. Himes, using Priceline as an example among other companies, spoke about stranded capital as a primary issue among business owners, and as a potential driver of infrastructure improvements.
Stranded capital refers to the money a business earns outside of the country. Bringing that money into the U.S. would face a tax rate of 35%, a rate which creates a tremendous disincentive to do so.
“There’s a very interesting idea that’s been batted around that says we’ll give you a break at bringing (stranded capital) back at a much reduced tax rate, and we’ll commit to use the money from the taxation for infrastructure. I’m a supporter of that idea, considering when we talk about infrastructure we’re talking trillions with a T, you’ve got to get creative about where that money comes from,” Himes said, adding that the felt confident creative solutions like this had the clout to come up with a trillion dollars.
“A lot of people say the President's plan is all public/private partnerships. And I happen to agree, a lot of that is very private sector oriented. There’s a real place for public private partnership. It doesn’t work everywhere. There’s a toll road out to Dulles that was built with private capital. You’re not building a highway across South Dakota with a public private partnership. So you cobble together a bunch of ideas like this repatriation with an infrastructure bank, you can get to those kinds of numbers,” Himes said.