Rep. Warren Davidson On GOP Tax Overhaul
RACHEL MARTIN, HOST:
After much delay, House Republicans are preparing to release their tax plan today. If passed, this would be the most sweeping overhaul of the tax code in a generation. As of yesterday, though, the details of the plan were still unclear. Joining us now to talk about the bill is Republican Congressman Warren Davidson of Ohio. Congressman Davidson, welcome back to our studios.
WARREN DAVIDSON: Good morning.
MARTIN: You've had to satisfy critics in your own party who've complained that the tax cuts in this plan weren't paid for and just added to the deficit, which made him uncomfortable. Have you now come up for a fix with that? How are you going to pay for the tax cuts?
DAVIDSON: Well, fundamentally, spending's what needs paid for. Taxes are, you know, policy that you need to get right. Of course we need to generate revenue, and that's been the challenge. You know, we've got a heavy burden. And that's really the purpose of the tax reform. We have to generate growth in our economy because there's no way we can spend our way out of a debt crisis. We have to grow our way out. And so everything about this tax reform package is focused on growth.
MARTIN: How are you going to pay for the tax cuts?
DAVIDSON: Well, one, is we're going to grow the economy. We're going to get our corporate rates competitive. So in 1986, when I got my driver's license and we last reformed our tax code, 35 percent corporate rate was not incredibly competitive but it was near the mean for developed economies like ours. Today, that's around 22 percent. So we need - even defensively - to get our tax corporate rate competitive.
MARTIN: Let me ask you about the corporate rate because it's been reported yesterday that Kevin Brady, chair of the House Ways and Means Committee, said that the bill would not include a permanent cut to the corporate tax rate. Is that your understanding that it would be phased in?
DAVIDSON: That would be news to me. So my understanding is that we've spent a lot of time talking about big, bold and permanent. So temporary things, the only thing that I've heard that was temporary is full and immediate expensing reform.
MARTIN: So news that a corporate tax cut would be phased in, that's not something you're familiar with? You still believe that the bill that we will see today will have a permanent corporate tax cut?
DAVIDSON: That's my understanding.
MARTIN: One of the more controversial measures has been this idea of lowering the cap on the amount of money taxpayers can set aside in their 401(k) retirement plans. Is that still on the table?
DAVIDSON: I've heard that's off. I had always thought that was fake news. I've been cringing as I hear Republicans attributed as generators of this idea. It's not popular with anyone I know.
MARTIN: The president has said this is about helping the middle class. Can you explain how that is likely to happen? You say this is about growth. Can you walk me through though how this benefits people in the middle class who might not benefit from an immediate tax cut in this?
DAVIDSON: Yeah. So, one, they'll benefit from lower taxes. So everyone in the middle class should see a tax cut. But, two...
MARTIN: Everyone in the middle class? I mean, it depends on which strata they're in.
DAVIDSON: Well, they haven't drawn the lines. We're going to see the bill today. And we're going to see a lot of analysis. And that's the important thing. This process is different than the binary choice, you know, this is the bill. It's going to roll out. It's going to be in draft. It's called a chairman's mark. And then over the next week-plus, we as members of the House will have an opportunity to comment on it. Then, Ways and Means will go in and actually do the committee markup. So the committee will have a debate.
So there is a chance that there will be lots of people. There's lots of complexity to the code. There's - every good cause on Capitol Hill has an advocate, and so there will be lots of people saying, oh, but our thing isn't in this. And so that's going to be the temptation. We're going to have to fight that off, but really listen to substantive feedback and say, we do have to make sure that hardworking families and American companies win with this tax reform.
MARTIN: Does the latest version of the bill have enough support among Republicans to pass at this point?
DAVIDSON: I expect it will, at least in the House.
MARTIN: Congressman Warren Davidson of Ohio. Thank you so much for your time.
DAVIDSON: Thank you. Transcript provided by NPR, Copyright NPR.