Top Dem: Party 'Open to Talking About' Value Added Tax
WASHINGTON – Rep. Joe Crowley (D-N.Y), vice chairman of the House Democratic Caucus and member of the House Ways and Means Committee, told PJM that he does not think Congress should halve the current 35 percent corporate tax rate as President Trump has suggested.
“We’re trying to get it down to anywhere from 15 to 20 percent,” Trump said in January.
Crowley also said he is willing to discuss a Value Added Tax (VAT) as part of a comprehensive tax reform package to see “what effect that will have” in the United States. Under a VAT system, the “value added” to a product would be taxed at each stage of production.
PJM: So, tax reform looks like it's going to be the next big thing the House is going to take up. Are there areas of common ground between Republicans and Democrats where you could actually reach a consensus?
CROWLEY: Well, as I said here, I think both sides recognize that the code is overly complicated. Because of that, it’s inefficient and in many respects it’s not fair. And the most important aspect of it, as I’ve said, is that it doesn't – parts of the code do not promote growth here and actually incentivize growth overseas, so those are things that we all kind of agree on. The real question is – the toughest question here is – we recognize how you get the 28 percent corporate rate without going into personal taxes or even pay-fors at this point and simply by eliminating all expenditures. It's easier said than done, but you have to do it over a time period because some pay little or no tax right now because of expensing; compare, you know, maybe a pharmaceutical company to Disney, where Disney pays the marginal rate bringing them both to 28 percent, means some would have to come up in tax and some would come down.
You know, how you make that a fairer system, what you do, does that necessarily determine what tax rate you should have is a question. You know we haven't incentivized, in the past, innovation, you know, if you do this you get these expenses, but is that what we have to do to make the code a more equal and fairer code? Their attempt to go to 25 or 20 percent puts even more tremendous stress on that, so then you have to go to a BAT or some type of that: VAT or type of value-added tax, or border adjustment is what they are describing it now as a BAT. And we know the BAT creates about a trillion dollars in revenue, that you can then use too. But Democrats will be keeping up how to drive – we kind of tend to look at BATs or VATs as regressive taxes, you know. So it's a complicated, it's a long – I have even more to say but it’s a complicated answer to a short question.