Business leaders said Thursday that it’s "critical" for tax changes to be permanent, as lawmakers debate whether to pursue long-term tax reform or temporary tax cuts.
“Permanence is critical, because I make decisions over three years, five years and 10 years,” Emerson Electric Chairman and CEO David Farr said at a House Ways and Means Committee hearing. “I don’t make a decision by a quarter.”
Thursday’s hearing was the first in a series of Ways and Means hearings on tax reform. Republican leaders of the committee want to pursue comprehensive tax reform legislation that is permanent and revenue neutral after accounting for economic growth.
But other GOP lawmakers have said that they would be open to enacting tax cuts that increase the deficit, even if those tax cuts have to be temporary. If Republicans want to pass a tax-reform bill through budget reconciliation to avoid a filibuster by Democrats, the tax bill cannot increase the deficit outside of the budget window.
The business leaders who testified before the Ways and Means Committee said that permanency to tax changes is crucial because it gives their businesses certainty while they consider making long-term investments.
“Permanence creates certainty. Certainty reduces risk,” said S&P Global President and CEO Douglas Peterson.
John Stephens, senior executive vice president and chief financial officer of AT&T, said that when his executives make “consistent, significant, material, capital investments,” it's helpful to have long-term knowledge of the tax rules.
The business leaders also generally expressed support for a provision in the House Republicans’ tax blueprint to allow businesses to immediately write off the full costs of their capital investments.
“We would invest more with immediate expensing,” Stephens said.
House Republicans’ proposal for immediate expensing has received some pushback in the business community because it is paired with a proposal to eliminate the deduction for businesses’ interest expenses. Treasury Secretary Steven Mnuchin has previously said that the White House is considering keeping the interest deduction.
Stephens said that the elimination of the interest deduction would be problematic on a standalone basis, but acknowledged that it may be necessary in a broader bill.
“Any plan being considered should be judged in totality, not just by a single provision,” he said.
Stephens added that he wants lawmakers to develop “reasonable transition rules” if they decide to eliminate the interest deduction.