A top official at the U.S. Chamber of Commerce warned on Thursday that failing to pass tax-reform legislation by early next year could harm the economy.
“If we don’t have tax reform sometime this or early next year, a lot of the business investment that’s been predicated on getting tax reform done will have been poorly made,” said J.D. Foster, senior vice president and chief economist at the Chamber. “Business investment will likely contract significantly, and we will have a significant period of economic weakness in my opinion.”
Foster’s comments came one day after the Commerce Department estimated that the U.S. economy grew at 3 percent in the second quarter of this year — a sign of economic strength. The economy is in its ninth year of economic expansion following the Great Recession.
Foster said at the Chamber’s annual Labor Day briefing that Congress has to ensure that economic growth continues by “avoiding unforced errors” such as failing to raise the debt limit, rewrite the tax code, boost infrastructure investment or expand free trade.
Foster said it’s clear businesses are counting on tax-reform legislation because a bill is needed to make the U.S. business tax system like other countries. If the tax code isn’t changed, businesses would start to view the U.S. economy differently, he said.
“If it turned out tax reform didn’t happen, there would be a fundamental shift in how businesses are thinking,” he said. “This is the big shot. We have a better shot at tax reform now than we have had for 30 years, by far.”
President Trump on Wednesday kicked off his efforts to sell tax reform in a speech in Missouri. Overhauling the tax code is a top priority for the White House and GOP lawmakers, but Republicans haven’t released a bill yet and have not yet reached an agreement on key issues.
Congress will also have to deal with other pressing issues in the fall, including preventing a government shutdown, raising the debt limit and providing federal aid to areas impacted by Hurricane Harvey.
Foster spoke positively about Trump’s speech, saying it was the president’s “most compelling statement yet” on tax reform. He also said that details of a tax bill should not be released too far ahead of a markup because that will give people time to focus on the negatives.
Top tax priorities for the Chamber include lower tax rates on business income, “expensing” of capital investments and a internationally competitive tax system.
The Chamber has been aggressively pushing lawmakers to pass tax-reform legislation in a timely fashion. In July, Chamber President Tom Donohue said in an open letter to Congress and congressional candidates that “failure is not an option” on tax reform.