WEBVTT - The Big Tax Hike Coming in Just Over a Year 0:00:03.120 --> 0:00:17.880 Bloomberg Audio Studios, Podcasts, radio News. 0:00:20.440 --> 0:00:24.560 Hello and welcome to another episode of the Odd Lots Podcast. 0:00:24.640 --> 0:00:27.000 I'm Joe Wisenthal and I'm Tracy Alloway. 0:00:27.240 --> 0:00:29.040 Tracy, can I say something that I think is a 0:00:29.040 --> 0:00:32.280 little silly about US politics or US policymaking? 0:00:32.840 --> 0:00:35.839 What an intro? Joe? The answer is always so. 0:00:35.920 --> 0:00:39.320 I'm sure there's plenty of things about our US system 0:00:39.360 --> 0:00:42.160 of government that you know could be improved upon in theory, 0:00:42.440 --> 0:00:45.440 but I'm aware of that for various rules that exist 0:00:45.560 --> 0:00:49.279 in DC, we often pass these laws that just like expire, 0:00:49.600 --> 0:00:51.960 and I think it has something to do with I 0:00:51.960 --> 0:00:56.360 don't know, reconciliation and the deficit and the filibuster and 0:00:56.440 --> 0:00:59.120 all these things where you pass a law and it 0:00:59.160 --> 0:01:01.480 seems fine, and then if you don't do anything, it 0:01:01.560 --> 0:01:04.839 just goes away in ten years. It actually seems very 0:01:04.880 --> 0:01:08.920 hard to pass a law that has any sort of permanence, 0:01:09.040 --> 0:01:12.640 especially if it changes to government spending or taxation. It 0:01:12.640 --> 0:01:16.920 seems very hard to make permanent, substantial changes to our 0:01:16.920 --> 0:01:17.720 fiscal policy. 0:01:17.800 --> 0:01:20.679 I have to say, when you've mentioned it's been ten years, 0:01:21.200 --> 0:01:25.600 that's kind of amazing. So you are specifically talking about 0:01:25.680 --> 0:01:30.120 the twenty seventeen Tax Cut and Jobs Act, aka the 0:01:30.160 --> 0:01:34.000 Trump Tax Cuts. Those went into effect in twenty eighteen, 0:01:34.440 --> 0:01:37.119 and many of the cuts are scheduled to expire at 0:01:37.120 --> 0:01:40.559 the end of twenty twenty five. So by twenty twenty six, 0:01:41.240 --> 0:01:44.039 if we don't have any change, if we don't go about, 0:01:44.400 --> 0:01:47.240 you know, doing it all over again, then we could 0:01:47.240 --> 0:01:49.280 see tax increases. 0:01:49.160 --> 0:01:52.080 Right like currently. If nothing happens, if we were to 0:01:52.120 --> 0:01:55.560 get sort of gridlock after November, or just nothing happens, 0:01:55.880 --> 0:01:59.280 there is this tax hike that is existing lass as 0:01:59.560 --> 0:02:02.520 starting in twenty twenty six. I believe some taxes are 0:02:02.560 --> 0:02:04.920 going to go up. I don't know exactly what they are, 0:02:04.960 --> 0:02:07.560 well learn what they are, but yeah, right now we 0:02:07.600 --> 0:02:10.519 are on course for taxis Now. Every politician I think 0:02:10.560 --> 0:02:14.840 on either side of the aisle would probably say, at 0:02:14.919 --> 0:02:19.639 least for some constituency, some income groups, we don't want 0:02:19.639 --> 0:02:21.760 this to happen. We don't want taxes to go for 0:02:21.760 --> 0:02:25.440 Americans earning less than four hundred thousand dollars. That's something 0:02:25.440 --> 0:02:28.000 Democrats say from time to time, things like that. But 0:02:28.160 --> 0:02:30.480 it doesn't matter if every side doesn't want it to happen. 0:02:30.520 --> 0:02:32.960 You still need some sort of compromised law to replace 0:02:33.000 --> 0:02:36.240 the existing law, and there's no guarantee of that because 0:02:36.280 --> 0:02:39.360 politics is politics, and so as of right now, Yes, 0:02:40.160 --> 0:02:42.840 so it is a something for people to recognize. And 0:02:42.880 --> 0:02:45.880 b I think it's also important to understand what is 0:02:45.919 --> 0:02:49.359 the existing tax code, what did we change? Why did 0:02:49.400 --> 0:02:52.840 we have this change under the Trump administration find Dacga. 0:02:53.000 --> 0:02:57.360 Yeah, the process of actually designing tax policy really interesting 0:02:57.400 --> 0:02:59.079 and I have a lot of questions, and a lot 0:02:59.080 --> 0:03:03.160 of it stems from my first ever encounter with US taxes. 0:03:03.639 --> 0:03:06.440 I was living in London at the time, so I 0:03:06.440 --> 0:03:09.560 had to file things like the foreign earned income exclusion 0:03:09.639 --> 0:03:13.000 and stuff like that, and I remember receiving this like 0:03:13.080 --> 0:03:16.840 four hundred page book from the IRS on how to 0:03:17.240 --> 0:03:19.880 do your taxes, and it would say, like for box 0:03:20.320 --> 0:03:23.880 seventy eight, a turn to page three hundred and twenty eight, 0:03:23.880 --> 0:03:25.800 and I would turn to the page and there would 0:03:25.800 --> 0:03:29.080 be nothing there of relevance. And I remember sitting on 0:03:29.120 --> 0:03:31.760 the floor of my living room in London and crying 0:03:32.200 --> 0:03:35.119 over this paperwork and this like admin that I had 0:03:35.120 --> 0:03:39.080 to do. So America's tax system seems incredibly complicated to me. 0:03:39.400 --> 0:03:42.800 I don't even know how you start to make changes 0:03:42.920 --> 0:03:45.080 to it. And I am very interested to learn. 0:03:45.360 --> 0:03:48.840 Well, I'm happy to say we literally have the perfect 0:03:48.840 --> 0:03:52.320 guest because we're going to be speaking with the architect 0:03:52.880 --> 0:03:56.240 of the Tax Cut and Jobs Act, former Chairman of 0:03:56.240 --> 0:03:59.400 the Ways and Means Committee, Kevin Brady, the senior consultant 0:03:59.440 --> 0:04:01.960 now at a can Kevin Brady, Thank you so much 0:04:01.960 --> 0:04:03.320 for coming on Outlocks. 0:04:03.000 --> 0:04:04.680 Joe, Thanks for having me. This is exciting. 0:04:05.240 --> 0:04:08.640 We're really excited about this. Why don't we start at 0:04:08.640 --> 0:04:10.720 the you know, politicians come in, they say we're going 0:04:10.760 --> 0:04:13.480 to cut taxes. Right, We've heard it forever and Trump 0:04:13.600 --> 0:04:16.719 was no different in that respect. But there's a difference, 0:04:16.760 --> 0:04:19.520 I think maybe between saying we're going to cut taxes 0:04:19.800 --> 0:04:24.280 and the idea of comprehensive tax reform that effects both households, 0:04:24.680 --> 0:04:28.440 that affects corporations, et cetera. When you went you're considered 0:04:28.440 --> 0:04:31.160 to be the architect of the TCGA, when you went 0:04:31.240 --> 0:04:34.480 into this project of reforming the US tax code, which 0:04:34.520 --> 0:04:37.440 I believe was the first time the tax code was 0:04:37.480 --> 0:04:40.280 reformed in over thirty years. At bad point, these things 0:04:40.279 --> 0:04:42.560 do not come. The stars do not align often for this. 0:04:42.880 --> 0:04:43.640 What was your goal? 0:04:43.960 --> 0:04:46.120 Yeah, so our goal one? Again, Thanks for having me be. 0:04:46.720 --> 0:04:49.000 So the goal was pretty clear because we had a 0:04:49.000 --> 0:04:52.320 tax code that was was obsolete compared to the rest 0:04:52.360 --> 0:04:56.960 of the world on the way how businesses competed internationally. 0:04:57.760 --> 0:05:01.240 Our code was a relic from the Kennedy administration. If 0:05:01.279 --> 0:05:03.440 that part of the code were a person, it was 0:05:03.520 --> 0:05:07.640 eligible for AARP. And as result, other countries had passed 0:05:07.680 --> 0:05:10.560 us by their corporate rates were better. They were driving 0:05:10.560 --> 0:05:13.000 a modern tax car. You know, we had a whole 0:05:13.160 --> 0:05:16.320 old clunker. We're a big economy, but we couldn't keep up. 0:05:16.400 --> 0:05:19.040 So as a result of the highest corporate rate at 0:05:19.080 --> 0:05:22.719 the time in the world in the obsoste tax code, 0:05:23.120 --> 0:05:26.320 you know, we were falling behind. For a decade before 0:05:26.400 --> 0:05:29.840 twenty seventeen, growth was really slow in America one point 0:05:29.960 --> 0:05:34.160 five percent average GDP growth, way low. Paychecks were stagnant 0:05:34.200 --> 0:05:37.440 for the decade, and as you may recall, about every 0:05:37.440 --> 0:05:41.279 other month there was another US company picking up roots 0:05:41.320 --> 0:05:44.360 from the US and moving overseas or bought by a 0:05:44.400 --> 0:05:49.720 foreign company, even though we were the bigger factor there 0:05:50.080 --> 0:05:53.880 moving headquarters and employees overseas. So you know, we had 0:05:53.920 --> 0:05:57.960 to act ways and means. Committee Republicans actually worked eight 0:05:58.040 --> 0:06:01.440 years to be ready to do tax reform. And I've 0:06:01.480 --> 0:06:06.159 credit former Chairman Dave Camp from Michigan and Paul Ryan, 0:06:06.279 --> 0:06:09.560 who later became a speaker the work we did for 0:06:09.600 --> 0:06:13.360 all the time, ready for prepared for someone in the 0:06:13.360 --> 0:06:16.839 White House to lead on tax form, and that's what 0:06:16.960 --> 0:06:18.479 happened in twenty seventeen. 0:06:18.920 --> 0:06:22.200 So these type of tax changes, you know, going back 0:06:22.200 --> 0:06:25.039 to my earlier point about the complexity of the US 0:06:25.160 --> 0:06:28.200 tax system and maybe it's outdatedness as you put it, 0:06:28.760 --> 0:06:33.160 Does the ambition start at the policy level. Is it 0:06:33.360 --> 0:06:36.600 there are particular things in the code that we think 0:06:36.760 --> 0:06:40.720 are maybe stupid or irrelevant or old fashioned, and so 0:06:40.800 --> 0:06:43.280 we need to start focusing on those. Or does it 0:06:43.320 --> 0:06:47.880 start with a general desire to lower taxes or reform 0:06:47.920 --> 0:06:50.719 the system, and then you kind of work backwards to 0:06:50.760 --> 0:06:52.160 the individual policy level. 0:06:52.480 --> 0:06:54.800 So the answer is the big goals and then you 0:06:54.839 --> 0:06:59.359 work backwards. For example, we specifically wanted a tax code 0:06:59.400 --> 0:07:02.360 built for great growth, growth of jobs paychecks in the 0:07:02.440 --> 0:07:07.120 US economy. We wanted to redesign the international code so 0:07:07.200 --> 0:07:10.040 that it would leap frog America to among the most 0:07:10.080 --> 0:07:12.960 competitive economies, but we wanted to make sure we wanted 0:07:13.000 --> 0:07:15.200 to do it in a way where our US companies 0:07:15.400 --> 0:07:18.720 could compete and win anywhere in the world, including at home. 0:07:18.760 --> 0:07:22.520 When they did compete, win overseas, bring those dollars, make 0:07:22.560 --> 0:07:24.480 it easy for them to bring it back invest in 0:07:24.480 --> 0:07:27.360 the US. The old tax code said, no, don't do that. 0:07:27.400 --> 0:07:32.000 And we wanted to be to drive innovation because whatever 0:07:32.000 --> 0:07:34.680 country wins the innovation race really wins the future, I 0:07:34.680 --> 0:07:37.960 think economically. And we wanted to make America the most 0:07:38.000 --> 0:07:41.160 desirable place for that new plant, that new research, that 0:07:41.200 --> 0:07:44.800 new intellectual property. So those were the bigger goals, and 0:07:44.840 --> 0:07:47.040 then we wrote to those and one of the lessons 0:07:47.040 --> 0:07:50.040 we learned during the eight years as we laid out 0:07:50.120 --> 0:07:53.400 drafts of what we might do, is that we realized, 0:07:53.520 --> 0:07:56.880 especially in twenty seventeen, we had to go bold because 0:07:56.920 --> 0:07:59.120 we only get this only happens, as you said, Joe, 0:07:59.120 --> 0:08:04.120 once generation really and so you can't miss that opportunity. 0:08:04.160 --> 0:08:06.680 The other thing we learned is the boulder you go, 0:08:07.440 --> 0:08:10.040 the more people are willing to give up parts of 0:08:10.040 --> 0:08:14.440 the old tax code to drive a new, modern, faster, 0:08:14.680 --> 0:08:18.960 better performing tax vehicle going forward. So we took lessons 0:08:18.960 --> 0:08:21.800 we'd learned into the whole tax debate. 0:08:22.440 --> 0:08:24.360 I want to get in obviously to some of the 0:08:24.400 --> 0:08:27.920 philosophical questions and about the questions of what a pro 0:08:27.960 --> 0:08:32.199 growth tax system looks like. But before we do, what 0:08:32.320 --> 0:08:34.600 don't you just lay out the sort of bullet point 0:08:34.720 --> 0:08:39.200 versions of what the TCGA did and then what specifically 0:08:39.320 --> 0:08:41.760 is set to expire and would revert to in the 0:08:41.760 --> 0:08:43.360 next few years, because I know not some of it 0:08:43.400 --> 0:08:45.559 is actually permanent, like the corporate side is not going 0:08:45.559 --> 0:08:47.120 to change. But what do you just sort of give 0:08:47.200 --> 0:08:50.319 us the bullet points from twenty seventeen and what could reverse. 0:08:50.559 --> 0:08:52.960 Yeah, so it is different twenty twenty five than it 0:08:53.000 --> 0:08:55.680 was in twenty seventeen. So really the focus had to 0:08:55.720 --> 0:08:59.400 begin with growth, you know, because our economy was so slow, 0:08:59.480 --> 0:09:02.600 and competitiveness because we had fallen so far behind. So 0:09:02.640 --> 0:09:06.800 that's why focus was on dramatically reducing the corporate tax rate. 0:09:06.840 --> 0:09:10.160 Because to twenty one which really put us we were 0:09:10.520 --> 0:09:13.840 dead last. We moved into the middle of the pack. 0:09:14.280 --> 0:09:18.880 But the redesign of the international code made us very 0:09:19.120 --> 0:09:22.559 very competitive, and so twenty one percent puts us in 0:09:22.600 --> 0:09:26.080 the middle of the pack for our major foreign competitors 0:09:26.520 --> 0:09:30.040 at twenty one percent, and we could have gone lower 0:09:30.760 --> 0:09:32.920 in that regard. In fact President Trump wanted to go 0:09:33.200 --> 0:09:36.680 lower there, but what we thought that would perform very well, 0:09:36.720 --> 0:09:40.720 and it did. We lower taxes on individuals across the board. 0:09:40.840 --> 0:09:43.400 Our taxes were high, they had been growing since the 0:09:43.480 --> 0:09:47.559 Reagan tax cuts, and so our job was we believed 0:09:47.600 --> 0:09:52.240 if you give families, workers, and small businesses, you know, 0:09:52.640 --> 0:09:55.800 more control over their earnings one, you know, they get 0:09:55.880 --> 0:10:00.280 to live their dream not the government's stream, and omy 0:10:00.360 --> 0:10:03.160 is going to grow. And so we did some some 0:10:03.200 --> 0:10:06.240 big things. I think on the middle class tax cuts. 0:10:06.520 --> 0:10:09.559 We created the first ever small business tax deduction twenty 0:10:09.559 --> 0:10:12.679 percent for those what we call pass throughs. Those are 0:10:12.720 --> 0:10:15.920 the non corporations where the money gets paid by the individuals. 0:10:16.040 --> 0:10:19.040 You reduced the amount of state and local taxes that 0:10:19.080 --> 0:10:20.760 I can write off on my text. 0:10:21.160 --> 0:10:24.959 Thank you. Well, you're welcome. You're welcome. Happy to get 0:10:24.960 --> 0:10:27.200 out of New York as fast as I can. But yeah, 0:10:27.520 --> 0:10:30.640 can we talk about Solomon. Yeah, it's hard to ignore it. 0:10:30.679 --> 0:10:33.520 A lot of our listeners are very yeah, I know, 0:10:33.880 --> 0:10:36.400 so I should have come in under an assumed name. 0:10:36.480 --> 0:10:40.079 But you couldn't ignore Salt. It is the biggest single 0:10:40.840 --> 0:10:44.800 subsidy I think within individual tax code. It's worth a trillion, 0:10:44.840 --> 0:10:49.040 two trillion, five and we needed those dollars to pay 0:10:49.120 --> 0:10:51.520 for the small for the middle class tax cuts for 0:10:51.520 --> 0:10:53.480 the most part. But here's what we did. So we 0:10:53.520 --> 0:10:55.520 took a look at it. It wasn't a red blue 0:10:55.559 --> 0:10:57.640 thing at all. In fact, Texas is one of the 0:10:57.679 --> 0:11:00.440 bigger users of the salt deduction because of our properties, 0:11:00.520 --> 0:11:03.000 the proper each yeah, yeah, So what we looked at 0:11:03.040 --> 0:11:06.280 and we realized, you know, everyone's subsidizing everyone, you know, 0:11:06.360 --> 0:11:12.720 rural community cities, low and modest income, higher income, non itemizers, itemizers, 0:11:13.160 --> 0:11:16.640 and so we arrived at a simple premise, which is 0:11:17.320 --> 0:11:20.360 why doesn't everyone just pay their own state and local taxes? 0:11:20.600 --> 0:11:22.920 I mean, we choose where we work and we live. 0:11:23.280 --> 0:11:25.679 We have a choice in our elected officials. Why is 0:11:25.720 --> 0:11:28.520 anyone obligated to help us pay more importantly, why are 0:11:28.559 --> 0:11:32.199 we obligated to help pay others? Because half the salt 0:11:32.240 --> 0:11:35.680 deduction goes to households making a million dollars and more. 0:11:35.760 --> 0:11:38.960 So what we did was and then use that money 0:11:39.280 --> 0:11:42.480 to lower rates across the board. So take a deduction 0:11:42.640 --> 0:11:46.240 from some, give it to many more. At the end, though, 0:11:46.559 --> 0:11:49.800 you know, we compromise talking with the legislators and high 0:11:49.800 --> 0:11:53.040 tax states. You know, it was really important we preserve 0:11:53.120 --> 0:11:56.400 some of it. So we took the standard average standard 0:11:56.440 --> 0:11:59.760 deduction across America, which was five thousand, and we doubled it. 0:11:59.840 --> 0:12:01.920 But then we didn't stop there. So we took the 0:12:02.000 --> 0:12:06.080 child tax credit, which was was sort of limited about 0:12:06.120 --> 0:12:08.320 one hundred and twenty thousand. We took us up to 0:12:08.400 --> 0:12:11.800 four hundred thousand, provide more tax relief for people who 0:12:11.880 --> 0:12:14.760 were impacted by salt. Then we did away with the 0:12:14.840 --> 0:12:19.040 AMT Alternative minimum tax. Again that's what how people couldn't 0:12:19.040 --> 0:12:22.120 get like in New York, New Jersey couldn't even use 0:12:22.160 --> 0:12:25.080 the salt tax deduction even those in place. Then we 0:12:25.200 --> 0:12:27.920 changed the marginal tax rates all to make we want 0:12:28.000 --> 0:12:33.160 lower taxes in every state, not red states, not every state. 0:12:33.400 --> 0:12:35.920 And so we made big changes to make sure we 0:12:35.960 --> 0:12:38.400 saw those tax cuts. And I know most people look 0:12:38.440 --> 0:12:40.480 at it and say, look, we just need to restore that. 0:12:40.679 --> 0:12:44.760 And I wouldn't be surprised if there's some give on that, 0:12:44.880 --> 0:12:47.720 because we've got we've got in our party as well. 0:12:48.040 --> 0:12:51.479 You know, we've got New Yorkers and New Jerseys, California's Illinois, 0:12:51.840 --> 0:12:56.400 you know, Minnesota, Long Island Republic. Yeah, so look, that's fair. 0:12:56.440 --> 0:12:59.280 It's important to them, and so I think there's there's 0:12:59.280 --> 0:13:01.360 some prett good discus sessions. I think you might see 0:13:01.360 --> 0:13:05.040 some relief. But here's the warning. It's really expensive. Yeah, 0:13:05.080 --> 0:13:07.720 and every dollar comes out of those middle class tax cuts. 0:13:07.800 --> 0:13:10.120 So whatever you give there, you know, you got to 0:13:10.160 --> 0:13:12.000 figure out where to pick it up somewhere else. 0:13:12.160 --> 0:13:16.400 Yeah, plenty of people still feel salty about salt. Myself 0:13:16.400 --> 0:13:19.800 included full disclosure. Okay, this reminds me, though. One thing 0:13:19.920 --> 0:13:22.920 I always wanted to ask about these is did you 0:13:23.120 --> 0:13:27.720 have a particular tax model in mind when you started 0:13:27.800 --> 0:13:32.080 this process. Did you look at potentially other countries and say, 0:13:32.080 --> 0:13:34.520 they're doing this right or they're doing this wrong. Or 0:13:34.600 --> 0:13:37.679 is it the case that because of the uniqueness of 0:13:37.720 --> 0:13:41.520 the US tax system there are no international comparisons that 0:13:41.559 --> 0:13:42.320 you can really make. 0:13:42.760 --> 0:13:44.920 There are tons of international comparisons. 0:13:45.040 --> 0:13:45.600 Okay, good. 0:13:45.679 --> 0:13:47.440 We spent a lot of time both the way they 0:13:47.600 --> 0:13:50.240 tax businesses that compete around the world and the way 0:13:50.240 --> 0:13:53.680 they tax themselves, and obviously we're out of step, especially 0:13:53.679 --> 0:13:57.559 on the international side. No very few other countries taxed 0:13:57.600 --> 0:14:01.160 you at home and taxed your business. Odd they taxed 0:14:01.200 --> 0:14:03.520 you at home, but we were doing both, and it 0:14:03.559 --> 0:14:07.520 was a problem. A lot of countries have value added taxes, 0:14:07.840 --> 0:14:11.320 you know, that add more revenue beyond their income taxes. 0:14:11.360 --> 0:14:13.319 We're well aware of that. But I'm going to tell 0:14:13.360 --> 0:14:16.560 you what was driving this as a model, and you're 0:14:16.559 --> 0:14:18.800 going to laugh at first, but let me explain it 0:14:18.800 --> 0:14:22.000 to you. So and why we did it. So you 0:14:22.080 --> 0:14:25.760 heard us talk about getting ninety percent of Americans to 0:14:25.800 --> 0:14:28.920 be able to file on the back of a postcard, 0:14:29.200 --> 0:14:32.040 and you probably said that is a political gimmick, but 0:14:32.160 --> 0:14:36.400 in fact, that was driving our goal of simplifying the 0:14:36.480 --> 0:14:40.040 tax code dramatically, so getting rid of a lot of 0:14:40.080 --> 0:14:45.240 that complexity for some, lowering the rates for everybody, and 0:14:45.520 --> 0:14:49.200 creating more fairness and understanding of how we tax people. 0:14:49.240 --> 0:14:53.560 And our thinking was look for again, there's people who 0:14:53.600 --> 0:14:55.200 would never be able to do that, but for a 0:14:55.240 --> 0:14:59.520 lot of Americans, you know, there is something powerful about 0:14:59.560 --> 0:15:04.360 looking at thirteen lines and saying, this is how I'm taxed. 0:15:04.800 --> 0:15:08.440 In almost all the neighbors that I can see, this 0:15:08.520 --> 0:15:11.240 is how they're tax too. And it also makes it 0:15:11.280 --> 0:15:14.800 harder for Washington to raise taxes because you actually know, 0:15:15.320 --> 0:15:17.280 you know what I mean, how you are being taxed. 0:15:17.280 --> 0:15:22.560 So the postcard drove what we hoped would be simplicity, fairness, 0:15:22.840 --> 0:15:26.480 obviously stronger growth as well. And on the business side, 0:15:26.880 --> 0:15:29.320 you know, our first proposal, which didn't make it all 0:15:29.360 --> 0:15:35.200 the way through, was to basically eliminate huge chunks of 0:15:35.240 --> 0:15:39.120 the international code and replace it with a border adjustment tax, 0:15:39.440 --> 0:15:42.840 which is basically a consumption tax that asks a simple question, 0:15:43.360 --> 0:15:46.720 do you sell your product or service in America? If so, 0:15:47.480 --> 0:15:49.800 everyone's paying the same rate. It doesn't matter where it 0:15:49.880 --> 0:15:52.960 was made, doesn't matter where it's shipped from, doesn't matter 0:15:53.200 --> 0:15:55.480 who did it. Are you selling it here? If so, 0:15:56.240 --> 0:16:00.920 if you're US or you're from France, you're paying the 0:16:00.920 --> 0:16:04.800 same rate. And so we thought, well, in the the 0:16:04.840 --> 0:16:08.080 other big virtue of it is that for American companies, 0:16:08.480 --> 0:16:12.560 you took that tax off of products you're exporting and selling, 0:16:12.960 --> 0:16:15.840 you put it on those coming in. So now we're 0:16:15.880 --> 0:16:19.160 more competitive compared to the vat around the world. And 0:16:19.600 --> 0:16:23.120 the simplicity of it it was bold. I still think it's, 0:16:23.680 --> 0:16:29.880 you know, an incredibly positive approach on taxes, but we 0:16:29.960 --> 0:16:33.080 had a short runway to get all this done. You know, 0:16:33.160 --> 0:16:35.840 industries that that that import a lot, whether you're a 0:16:35.880 --> 0:16:40.600 Walmart or a refiner or an Apple or whatever. You know, 0:16:40.680 --> 0:16:43.480 they have real objections to it. We didn't have time 0:16:43.520 --> 0:16:45.120 to be able to sit through and work, and so 0:16:45.360 --> 0:16:47.760 at one point we had to jettison what was one 0:16:47.760 --> 0:16:49.840 of the bolder I think more were positive things. But 0:16:50.160 --> 0:16:53.320 that's the process, you know, Tracy, you're asking about. It's 0:16:53.480 --> 0:16:56.080 you do. No matter what your dreams are, you got 0:16:56.120 --> 0:16:57.040 to get it through Congress. 0:16:57.480 --> 0:17:00.960 So tell us more about that process. What are conversations 0:17:01.240 --> 0:17:03.800 actually like are you all in a room together, like 0:17:04.200 --> 0:17:07.400 yelling at each other? Are there, you know, phone calls 0:17:07.440 --> 0:17:08.879 at midnight, that kind of thing. 0:17:09.240 --> 0:17:12.520 So because we started so early, you know, it was 0:17:12.640 --> 0:17:18.439 just a continual series of meetings, listening sessions, discussions with 0:17:18.800 --> 0:17:22.560 the scorekeepers like Joint Committee on Taxation, Congressional Budget. 0:17:22.600 --> 0:17:23.439 I'm going to ask you about that. 0:17:23.640 --> 0:17:25.640 Yeah, you got to figure out you got to turn 0:17:25.680 --> 0:17:28.000 the Rubik's cube to figure out, Okay, if we do 0:17:28.119 --> 0:17:30.640 this and this, what do you get, Like what kind 0:17:30.680 --> 0:17:33.399 of growth and who pays the taxes and what's the 0:17:33.400 --> 0:17:35.720 cost of all that? And so we had a long 0:17:35.800 --> 0:17:40.240 time to run through countless meetings, briefings, bring an ex person, 0:17:40.280 --> 0:17:43.480 all that. But in twenty seventeen is we really started 0:17:43.520 --> 0:17:46.760 to get crunch time. All of that accelerated, and so 0:17:46.920 --> 0:17:50.200 we certainly in the House, we started with this premise 0:17:50.359 --> 0:17:52.359 and we went to our House members and said, look, 0:17:52.560 --> 0:17:54.760 we're going to tear the tax code down to its 0:17:54.840 --> 0:17:58.600 foundation and we're going to rebuild it. So go back 0:17:58.600 --> 0:18:04.080 home and listen to what people what's important in twenty seventeen, 0:18:04.160 --> 0:18:07.000 not the nineteen eighties, like what is important to you, 0:18:07.040 --> 0:18:09.520 and then we rebuilt it from that. And so lots 0:18:09.760 --> 0:18:12.280 lots of meetings, a lot of listening sessions late into 0:18:12.320 --> 0:18:14.800 the night. We had the Ways and Means Committee members working. 0:18:14.960 --> 0:18:17.520 We brought them back for holidays, you had them work 0:18:17.520 --> 0:18:20.119 when everyone was on recess. A lot of it was 0:18:20.200 --> 0:18:25.480 listening because to other members in briefing groups from DC 0:18:25.640 --> 0:18:28.800 and around the country. Even though we didn't get Democrats support, 0:18:29.320 --> 0:18:32.160 you know, I briefed our Ways and Means Democrats, our 0:18:32.680 --> 0:18:36.280 new Democrats, our problem solvers, the trade the unions sat 0:18:36.320 --> 0:18:38.720 down with them. We knew, I knew they weren't going 0:18:38.760 --> 0:18:40.080 to be able to support this. If I wanted to 0:18:40.080 --> 0:18:43.320 hear what was important to them to figure out what 0:18:43.440 --> 0:18:46.640 might be the biparson areas that we can design too, 0:18:46.680 --> 0:18:49.320 and it was all that was hugely helpful. But the 0:18:49.400 --> 0:18:52.840 process you're working with, the Senate, the White House, constant 0:18:52.880 --> 0:18:57.680 media presence, lots of groups attacking or supporting. It's sort 0:18:57.680 --> 0:19:00.640 of a hurricane, you know what I mean of input. 0:19:01.200 --> 0:19:01.919 As you're doing that. 0:19:17.600 --> 0:19:20.000 I'm going to ask you a kind of political question. 0:19:20.160 --> 0:19:24.199 You can be as forthcoming as you would like to 0:19:24.240 --> 0:19:28.080 be on this question. But there's obviously a possibility that 0:19:28.200 --> 0:19:31.720 you know, Trump wins in November, and he says things 0:19:32.080 --> 0:19:35.120 in the media that I think probably people in DC 0:19:35.440 --> 0:19:37.879 like wonder, like how serious is he? So, you know, 0:19:38.080 --> 0:19:40.800 like and some things he says seem like quite ball. 0:19:40.920 --> 0:19:41.119 You know. 0:19:41.320 --> 0:19:43.520 He says he's talked on the campaign trail this time 0:19:43.720 --> 0:19:47.040 no taxes on tipped income, I think he said last 0:19:47.119 --> 0:19:49.280 night or recording the September twenty sixth, He's like, no, 0:19:49.359 --> 0:19:52.879 we're just not going to tax us manufacturers. He says 0:19:52.880 --> 0:19:57.680 some things that are more make economists very nervous, such 0:19:57.680 --> 0:20:01.760 as massively increasing tariffs would our attacks. And he says 0:20:01.800 --> 0:20:05.520 things that make people even more head scratched, such as, oh, 0:20:05.560 --> 0:20:08.680 maybe we could create a thirty five trillion dollar crypto 0:20:08.760 --> 0:20:11.400 client and pay off the deficit. So what I want 0:20:11.480 --> 0:20:15.600 to ask you is, from the perspective of a someone 0:20:15.680 --> 0:20:20.359 writing policy, how should people think about what he says 0:20:20.600 --> 0:20:26.240 publicly and translating this or taking it seriously? How seriously 0:20:26.240 --> 0:20:26.720 should we tell you? 0:20:26.800 --> 0:20:28.480 What do you tell us? How we should? Yeah? 0:20:28.920 --> 0:20:32.920 And then how these things maybe get molded into something real. 0:20:33.200 --> 0:20:37.560 Having experienced working with the President both on healthcare, tax 0:20:37.600 --> 0:20:40.720 reform and in trade to some degree so that every 0:20:40.800 --> 0:20:44.680 day the press in the Capitol would ask me about 0:20:44.680 --> 0:20:47.600 the president's latest tweet, I always did, but I didn't 0:20:47.600 --> 0:20:50.119 pay attention to his tweets. I paid attention to his 0:20:50.240 --> 0:20:53.400 campaign promises because I've never seen someone in the White 0:20:53.440 --> 0:20:57.960 House so focused on this is what I said, we do? 0:20:59.040 --> 0:21:02.080 Have you done it? Because it matters to him? But 0:21:02.680 --> 0:21:05.960 the flip side of that was, you know, he was 0:21:06.000 --> 0:21:09.320 not wed to doing exactly that. So my advice always 0:21:09.400 --> 0:21:13.760 is take him seriously, but not literally, because whether you're 0:21:13.760 --> 0:21:16.920 working on taxes or trade, whatever, man, he's opened lots 0:21:16.960 --> 0:21:19.119 of changes. He's listening to sort of that team of 0:21:19.240 --> 0:21:22.360 rivals discussion. You can shape, and we did in tax 0:21:22.480 --> 0:21:25.879 from shape a lot of what were campaign promises into 0:21:26.359 --> 0:21:27.879 positive things, but not exactly. 0:21:28.000 --> 0:21:31.080 I just one follow up on this one thing that 0:21:31.160 --> 0:21:34.000 he does not if a future Trump presidency does not 0:21:34.119 --> 0:21:36.840 really need the help of Congress on would be terrorists. Yeah, 0:21:37.240 --> 0:21:41.679 and he's talking. He he to your point. He followed 0:21:41.680 --> 0:21:44.600 through with his terror promises from the twenty sixteen election, 0:21:44.960 --> 0:21:47.720 and in the twenty twenty four election he has much bigger, 0:21:48.080 --> 0:21:51.000 terarff promises. And I have to imagine that you know 0:21:51.080 --> 0:21:53.720 a lot of people, particularly in DC, who are like 0:21:53.800 --> 0:21:58.760 deeply uncomfortable about this, particularly corporate anyone who trades internationally, 0:21:58.800 --> 0:22:03.480 et cetera. What are you telling them about the risk 0:22:03.560 --> 0:22:06.600 of a very different international trading regime unto the next president. 0:22:06.720 --> 0:22:09.000 Yes. So I'm not a fan of tariffs. I think 0:22:09.000 --> 0:22:13.360 they're incredibly damaging. You punishes America more than whoever we're 0:22:13.400 --> 0:22:18.159 trying to punish, And yeah, it is. I don't advise 0:22:18.200 --> 0:22:21.000 any president to go that route unless there is some 0:22:21.320 --> 0:22:25.000 very specific target you need to hit. But what I 0:22:25.040 --> 0:22:28.600 advise them in using the experience of his first term 0:22:28.840 --> 0:22:32.200 is same thing. Take him he's going to use tariffs 0:22:32.520 --> 0:22:35.840