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Texans Ted Cruz and Kevin Brady push tax code overhaul on Capitol Hill

U.S. Sen. Ted Cruz outlined his vision for overhauling the tax code in a speech Wednesday, while U.S. Rep. Kevin Brady, chairman of the House Ways and Means Committee, pitched his own proposal.

U.S. Rep. Kevin Brady, R-The Woodlands (left) and U.S. Sen. Ted Cruz.

WASHINGTON – Two Texas Republicans – U.S. Sen. Ted Cruz and U.S. Rep. Kevin Brady of the Woodlands – made a major push on Capitol Hill on Wednesday for their visions on how to overhaul the nation's tax code. 

The stakes are high for Republicans on the issue – it is a longtime goal of the GOP to reduce taxes on a major scale. But also, given the party's failure to repeal former President Obama's 2010 health care law, Republicans are running out of time to move major legislation before the 2018 midterms begin to take over the political landscape. 

“We’ve been given an historic opportunity, an opportunity to produce incredible results for the men and women who elected us,” said Cruz in a high-profile speech hosted by the conservative Tax Foundation. “The promise to remodel our antiquated, bureaucratic, ineffective tax system with the objective of creating more jobs, higher wages, more opportunity.”

Cruz said his plan to overhaul the tax code was based off of three principles: flat, simple and fair. His proposal included creating a low, flat tax rate and allowing people to file their taxes on a postcard. He also encouraged Congress to eliminate the estate tax and permit businesses to fully and immediately deduct expenses related to capital investments.

Cruz proposed versions of some of these policies as a presidential candidate. Back in October 2015, the senator unveiled a ten percent flat tax and he backed the postcard and expensing concepts last year.

While Cruz has a  large platform as a former White House hopeful, the Texans most likely to be in the middle of negotiations are U.S. Senate Majority Whip John Cornyn and Brady, the U.S. House Ways and Means chairman. 

In a Wednesday Forbes op-ed, Brady called a tax code overhaul "the legislative challenge of a generation for America."

He advocated for lower corporate rates, allowing companies to write off more expenses and a "territorial tax system," in which a corporation's domestic – but not foreign – income is taxed.

Brady addressed his GOP colleagues on the issue in a Wednesday morning meeting, according to multiple news reports. In an interview with the Associated Press, U.S. House Speaker Paul Ryan – who is closely aligned with Brady – declined to say whether the GOP tax overhaul plan would increase deficits. 

Ryan said at a news conference Wednesday that he, Brady and GOP leaders will release an outline for their plan on Sept. 25. 

"This is the beginning of the process," Ryan said.

During a conference call with reporters, Cornyn said there was support in the Senate for a tax code overhaul that is not revenue neutral but said that he was also concerned about what that would mean for the deficit long-term.

“I believe [tax reform] does not have to be deficit neutral on a static basis, but that we all look at it based on expectations for how the economy will grow in projected revenue coming from that economic growth,” Cornyn said.

Republicans are expected to focus on tax changes that expire at some point in the future as those measures will be easier to pass under arcane Senate rules. Cruz advocated Wednesday for making the tax changes expire in 20 to 30 years. Cornyn said he would favor keeping the budget window at 10 years but didn't rule out a longer timeframe.

“I’m not currently in the business of saying never to something that will help us get to this issue of tax reform,” he said.

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Congress Economy Kevin Brady Ted Cruz