Updated 1:54 p.m. | Laying down a conservative marker for overhauling the tax code, Sen. Ted Cruz is calling on tax writers to go much bolder than they probably intend.
The Texas Republican wants to use as long as a 30-year budget window for a reconciliation bill that would be focused on tax cuts, rather than on a deficit neutral proposal. But the unlikeliest of the Cruz proposals is using the same reconciliation vehicle to roll back the Dodd-Frank financial regulatory law.
Budget windows are typically 10 years. The longer budget window, which has been discussed before, could be a way around a repeat of the problem with the tax cuts enacted in 2001 at the beginning of the George W. Bush administration, which ended after 10 years. The Bush tax cuts faced a 10-year sunset so they could pass under budget reconciliation rules, which need a simple majority in the Senate to pass.
“There is no magic 10-year window,” Cruz said in prepared remarks to Hillsdale College’s Kirby Center, keynoting a Tax Foundation event, pointing to past examples of different duration.
“With federal revenues set to rise significantly above what they have been for the last 50 years, we must strive to do better. We must actually lower the amount of money the federal government takes from hardworking Americans by enacting a real tax cut and not just reforming the tax code to shift the tax burden from one group to another,” Cruz said.
Like President Donald Trump and Vice President Mike Pence, Cruz is pushing for a lower corporate tax rate and for the elimination of estate taxes, which were already curtailed as part of the last big tax deal with President Barack Obama. The Texan is not a member of the tax-writing Finance Committee, but holds sway among tea party conservatives.
A group known as the Big Six comprised of Speaker Paul D. Ryan, Majority Leader Mitch McConnell, Senate Finance Chairman Orrin G. Hatch, House Ways and Means Chairman Kevin Brady, Treasury Secretary Steven Mnuchin and White House chief economic adviser Gary Cohn has been negotiating a tax package. An “outline” is expected to be released the week of Sept. 25.
Cruz also wants immediate expensing — allowing for the full deduction of capital purchases in the year they take place — rather than the current system of deductions according to depreciation schedules that stretch over years.
“Domestic capital investment increases productivity, which results in more jobs and higher wages. And that means higher living standards for American families,” he said.
He is also continuing to push for a transition to a territorial tax system and provisions that make it favorable for companies to repatriate foreign earnings to the United States. In a territorial system, U.S.-based multinational corporations would pay taxes only on what they earn at home instead of on their worldwide income.
In his remarks, the Republican from Texas also pushed to use the expedited reconciliation vehicle to end the Obama-era financial regulatory law known as Dodd-Frank. That seems unlikely, since it would require a decision when the Senate moves forward with a budget resolution. The Banking panel would need to get reconciliation instructions within the resolution. The House passed a standalone bill in June that would repeal large parts of the 2010 law.
“As we’re pursuing pro-growth policies, we should also use the reconciliation bill to repeal Dodd-Frank. The wave of new regulations it created has driven consolidation of smaller banks or their outright sale to larger institutions,” Cruz said. “So, big banks are getting bigger, and small financial institutions are disappearing.”