With Trump meeting today, Richard Neal of Mass. enters tax overhaul fray
WASHINGTON — He’s known as the insider’s insider, a veteran relationship-builder on Capitol Hill, a quiet dealmaker.
Now the low-key, pragmatic Massachusetts lawmaker, Representative Richard Neal, is facing a challenge that could win him a new title: Miracle-worker.
By virtue of 30 years seniority in the House and the respect he has won among colleagues, the low-key Springfield congressman is the top Democrat on the Ways and Means Committee just as Republicans are readying a push for major tax cuts and a reform of the byzantine US tax code.
That perch gives Neal a frontline role — including a kickoff meeting at the White House with Trump and other lawmakers scheduled for Thursday morning — as Democrats try to put their imprint on an ambitious effort that faces very long odds. You think the Republicans are tied up in knots over their planned repeal of the Affordable Care Act? Rewriting tax law promises to be even more difficult, starting with multiple unknowns about what Trump even wants.
“You can’t tweet tax policy,’’ Neal said. “We’re trying to figure out what Trump’s plan is.’’
Trump has said he wants to reduce the corporate tax code to 15 to 20 percent, from its current 35 percent. He has said he wants to cut the tax load on the middle class. His nominee for treasury secretary has said income tax cuts for the rich will be offset by wiping out unspecific deductions. Beyond that, not much is clear.
House Speaker Paul Ryan and Ways and Means Chairman Kevin Brady have a “blueprint” that they are working on turning into actual legislative text. Independent analysts have said the Republican plan would reward the rich more than the middle-class.
Trump has muddied the waters by criticizing a cornerstone of that House plan — what the wonks in Washington are calling a “border adjustment tax” — then reversing course last week and embracing it as a possible way to pay for the wall he wants to build with Mexico.
The House plan hinges on imposing a 20 percent tax on imports to the US from all countries, while all US exports would be tax free.
Republicans say the system will encourage companies to keep jobs in the US, while also producing enough new revenue to offset reductions in the corporate tax rate. Critics say it amounts to a new tax on American consumers, who will pay more for retail goods.
Senate Republican plans remain murky. Senate Leader Mitch McConnell has talked about using a procedural maneuver known as “budget reconciliation” to bypass the need to win any Democratic votes for a tax bill.
Along with Neal, Trump was scheduled to meet Thursday with Brady and the two top members of the Senate Finance Committee, Republican Orrin Hatch of Utah and Democrat Ron Wyden of Oregon.
Neal says he believes a bipartisan deal is possible, but it won’t be an easy lift.
“We all agree you have to do something about the current system, and that’s generally where the agreement stops. Keep it general, everybody’s on board; get specific, the fractures settle in,” Neal said.
He was coy on Ryan’s border adjustment plan: “I think it has some emotional appeal, but I also think we have to be mindful about not touching off a trade war,” he said.
It’s established Washington lore that the 1986 tax reform package, which was left for dead more than once, succeeded in part because then-House Speaker Tip O’Neill, a Massachusetts Democrat, had cordial enough relations with President Reagan that they often had drinks together at the White House.
Today’s coarser partisan back-and-forth makes it hard to envision such deals possible, but some, including Neal, say there’s enough goodwill among the key players to work. And Trump brags that, above all, he is a deal-maker from the private sector.
“Relationships still matter, especially in the legislative process when you’re trying to bring people together around an idea. Richard Neal has as good of relationships among his colleagues, and I mean both Democrats and Republicans, as any member I can think of,” said Dave Camp, the previous GOP Ways and Means Chairman who retired in 2015.
In December, Neal met with Wyden and says they see eye-to-eye on strategy. He knows Senate Minority Leader Chuck Schumer from when the New York Democrat served in the House.
As for Ryan, Neal used to vigorously debate the Wisconsin Republican when he served on Ways and Means; the House speaker was the first person to call and congratulate Neal when he secured the ranking-member spot late last year. And Neal met recently with Brady, the Ways and Means chairman, with whom Neal has worked on tax legislation in the past.
“We’ve got a very solid basis to work together. We come at these issues from very different viewpoints, but if there is common ground to be had, I’m confident we’ll find it,” Brady, a Texas Republican, told the Globe.
A former three-term mayor of Springfield, Neal has been in the US House since 1987 and a member of the Ways and Means Committee for 25 years. He’s decidedly less showy than some of the newer additions to the Bay State delegation, preferring to dig into policy weeds and work behind the scenes to cut deals. He has deep knowledge on the arcane turf of tax policies, including how to get US companies to bring money parked overseas back to the US.
“I think of him as someone who remembers he’s a Democrat but harkens back to the old days where we were able to work across the aisles together,” said Janice Mays, the longtime staff director and chief counsel for Ways and Means Democrats, who now works on tax policy at PwC, the huge accounting firm.
Mays recalled a bill Neal worked on with Representative Charles Boustany of Louisiana in the last Congress that sought to encourage companies to keep their patents and other intellectual property in the US with lower tax rates. “He was the one Democrat willing to step up and say, ‘This is a place I think we can work together,’” Mays said. The bill, like most tax legislation in Congress in recent years, ultimately did not go anywhere.
In the interview with the Globe, Neal outlined in broad terms Democratic goals for any tax deal: tax cuts for the middle class along with investment in community college, apprenticeship programs, and other ways to build skills of American workers hurt by globalization.
He said that Trump’s election victory was in part a reaction to growing income inequality, so tax reform should address that problem rather than exacerbate it by, say, repealing the estate tax, as Republicans would like to do.
And Neal is signaling that his propensity for deal-making has its limits. In a recent speech, he cited numbers from the non-profit Tax Policy Center that found 75 percent of the Republican’s tax cuts would go do the wealthiest citizens.
“Democrats believe there’s a better way,” he said. “As Democrats, we have a responsibility to lift up the middle class and protect policies that move them forward, not backward.”