WASHINGTON – Attendees at the NACS Government Relations Conference this week heard expert opinion on tax reform before taking that knowledge to Capitol Hill and speaking directly with their legislators.
Tax reform is an issue that will progress during the next three years, particularly as we move into the presidential election cycle. Scott Hodge, president of the Washington, D.C.-based Tax Foundation, remarked to event participants that although there is broad consensus that the tax code is in need of an overhaul, the chances of seeing real reform before 2017 is slim. The reason, he said, is because Democrats and Republicans have very different ideas about what the tax code should do, making it extremely difficult for the two sides to come together and find compromise “any time soon.”
There’s a difficult road ahead, yes, but not impossible. Hodge said that his group views tax reform as a three-year process. First, laying the groundwork (2015), hearing the ideas on tax reform championed by the presidential candidates (2016) and pushing for tax reform with a new administration and Congress (2017).
Hodge gave an overview of the current tax system and “the landmines” that members of Congress face. “Strangely,” he said, the biggest issue right now is reauthorization of the Highway Trust Fund, which is spending more than it’s collecting in federal gas tax revenues.
“You would think that Congress would be looking to either raise the gas tax, which is about the closest tax we have to a user fee, or cut highway spending,” he said. But instead, Congress is looking at “every other possible funding mechanism except for the one tax that should be on the table.”
In terms of what real tax reform could look like, from President Obama’s proposed ideas to other plans offered by members of Congress such as Rep. Devin Nunes (R-CA-22) and Sen. Ben Cardin (D-MD), Hodge said that broad-based economic growth has to be the top priority.
“This means growth that lifts wages and living standards across the board,” he said, adding the preference is “a system that reduces the double-tax on saving and investment, moves to full expensing for businesses and lowers rates for everyone.” The Tax Foundation, he said, has modeled “stylized cash-flow taxes” and found that this type of system “would boost GDP by upwards of 14%,” meaning as much as $2 trillion in higher GDP per year. It also means higher wages for everyone because of the increased investment in plant and equipment.
Over the next three years, the Tax Foundation is planning to advocate its tax reform model “to steer the debate away from policies that stifle growth” to those that promote growth.
The NACS Government Relations Forum wrapped up yesterday with attendees meeting with their elected officials and their staff to talk about the industry’s top issues and concerns and give a voice the $695 billion convenience store industry. In many meetings retailers introduced themselves to recently sworn-in members of Congress, establishing important relationships that will benefit the industry for years to come.
Look for more coverage of this year’s Government Relations Conference in the April issue of NACS Magazine.