Rep. Kevin Brady tells Newsmax the automatic spending cuts required by sequestration offer a “real opportunity” to change the direction of government.
The Texas Republican, a member of the House Ways and Means Committee, also says his committee is “dead serious” about implementing fundamental tax reform this year.
Rep. Brady was first elected in 1996.
“I’m supporting these automatic spending cuts,” he declares in an exclusive interview with Newsmax TV.
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“It’s the first real opportunity to change the direction of the government since I was part of Newt Gingrich’s balancing the budget. We can, in March following those automatic cuts, [make changes in the cuts]. We designed some of them so that we give the military and other programs the flexibility to deal with them. It’s very important that they go forward.”
Asked if it matters at this point who takes the blame for the cuts, Brady responds: “Normally it wouldn’t matter but the president has gone out of his way to make sure everyone in the country believes it was someone else’s idea but his. So part of it is just fact-checking the president.
“But at the end of the day we’re simply rolling back the size of government to the size it was before the stimulus, that massive injection of funding. It’s now worked its way into the overall budget. It’s why our deficits, part of the reason at least, are so high and we continue to roll up all this debt.”
Rep. Dave Camp, chairman of the Ways and Means Committee, has divided the committee into task forces to take a look at separate sectors of the economy, with the goal of tackling tax reform.
“It’s critical for our economic growth,” Brady comments. “We’ve got to get a much better tax code that’s not so complex, that doesn’t pick winners and losers, and frankly with the one we have today, our global competitors are just beating us around the head.
“Our Ways and Means Committee is dead serious about doing fundamental reform this year, and this is another step forward by creating these working groups on specific areas of the tax code. With a short timetable, we’ll report back by April 15. [Camp’s] message to the rest of Congress and Capitol Hill is we’re moving forward intensely on tax reform.”
Brady is tasked specifically with the energy sector. He was asked about calls for an end to all subsidies for energy companies.
“The president continues to call for closing tax loopholes but he tends to single out certain industries, like energy,” he tells Newsmax.
“Here’s my thought, and Chairman Camp’s, which is we’re going to close tax loopholes but we’re not going to close them so the president can spend more money. We’re going to close them so we can lower tax rates for families and small businesses. We think that’s the right way to do it.
“On energy, my thinking is affordable energy driven by the free market is key to our economic growth, so a fairer, simpler tax code encourages a wide variety of the energy production here at home without picking winners and losers.”
Energy prices would be higher if energy companies did not receive those subsidies, he adds.
“Most of [the subsidies] deal with raising capital and the expense it takes to actually research, explore, and bring up that oil and natural gas. If you remove them, two things would happen. They would explore and produce less, and when they did the price would be higher.
“Capital matters to the industry that already has an extraordinary high effective tax rate — the energy industry on the whole has about a 40 percent average rate as opposed to 25 percent for most businesses. They’re already paying a huge part of the federal government’s tax revenues. Let’s treat everybody in a similar way. If we do that, we’re going to produce more energy.”
As for what most needs to change about the federal tax code, Brady says: “One, for small businesses, I want to make sure that they don’t pay a different rate than the larger corporations. That’s important.
“Secondly, our tax rate for business is now the highest in the world. It needs to be lowered to 25 percent.
“Finally, we are one of the few strong economies that double tax our companies when they compete overseas and as a result we’re often uncompetitive with China, Brazil, and European companies. I want a single tax system that’s as competitive with the rest of the world as we can get.
“Those three changes are critical.”
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