House Speaker Paul Ryan will argue Tuesday that Republicans should enact permanent tax reform instead of a temporary tax cut, but will also suggest that he is open to alternatives to his proposed border-adjusted tax.
"We are going to get this done in 2017. We need to get this done in 2017," Ryan will say in his remarks to the National Association of Manufacturers on GOP plans to introduce and pass a joint tax bill this fall. "We cannot let this once-in-a-generation moment slip."
"Transformational tax reform can be done, and we are moving forward. Full speed ahead," Ryan will say.
Ryan has long sought comprehensive tax reform. Before being drafted as speaker, he won the gavel of the House Ways and Means Committee that has jurisdiction over taxes, and last year, he helped author a tax reform blueprint that has proved to be the starting point for intra-GOP talks on tax reform.
But the border adjustment provision of Ryan's outline has generated controversy. It has elicited fierce opposition from retailers and other industries that fear it would result in higher taxes on imported products. Border adjustment would work by exempting export sales from companies' taxable income, but disallowing the deduction of the cost of imported goods from taxable income. Supporters maintain that importers would not be hurt because currency would adjust to offset the import tax.
The idea has fallen out of favor with the Trump administration and many congressional Republicans. However, Ryan's proposed border-adjustment scored particularly well in the models used by tax economists in terms of raising tax revenues.
Ryan's office said that he won't litigate items of debate between Republicans at Tuesday's speech, but suggested that he will open up the question of the border-adjusted tax.
"While acknowledging that the particular mechanism must be sorted out with the administration, he will argue that we must fix the current incentive for American companies to move abroad, make things overseas, and then sell them back into America — which costs us jobs," his office said. Ryan will also stress that the U.S. needs a more competitive tax system after years of being disadvantaged.
"We are actually unique in the world in the way we discourage capital from coming back to America and how we incentivize off-shoring jobs," he'll say. "This is not the kind of exceptionalism we should aspire to…We must think differently, so that once again we make things here and export them around the world."
Ryan is also expected to remain firm on another source of tension between the administration and House Republicans: whether the bill has to be a permanent tax reform. Trump's team has never committed to permanence, and in recent weeks has eyed legislative workarounds to allow for a temporary tax cut.