Many businesses are worried that one of the Republicans’ main platforms in the 2016 election will fall by the wayside.

One expert, Joshua Baca, senior vice president of DDC Public Affairs, called the recent attempts to repeal and replace the Affordable Care Act “a colossal failure of leadership for two reasons.” Republicans running on the platform of repealing and replacing the bill, and then being unable to come to a consensus on the replacement showed a failure in leadership, Baca said.

This failure “could really impact the business community,” said Baca. With less money to work with as a result of keeping Obama-era healthcare taxes, tax reform may be much more difficult for the current administration. Businesses are “potentially looking at a much smaller tax reform package that I think the market has been relying on,” he said.

Much speculation remains on what, if anything, will make up this difference. Baca said one option would be to put into use the much-disliked Border Adjustment Tax, which places large tariffs on both imported and exported goods.

To Baca, the alternative is worrying. “Does this mean that we don’t get a lower rate, that would really spur growth, that would really create jobs?” asked Baca. “Right now, it’s looking like a smaller package that’s less ambitious, and probably not as big as many people hoped.”

“Tax reform has to happen. This is a central theme of what the current Congress and the current administration campaigned on… If tax reform does not happen, this is a big failure and a big setback in an ambitious agenda.” Baca told What’s Working in Washington.

Baca said tax reform will help Americans. “Companies need a better tax structure to create more jobs in America. We also need a better tax structure to preserve existing jobs in America, and coupled with that, we have a very uncompetitive individual tax structure, that in my view penalizes people, as opposed to helping them save.”

With worries mounting in the business community that neither healthcare nor tax reform will be possible under this administration, Baca believes “we will immediately enter a new campaign cycle where Democrats will seize the momentum,” he said.

Baca said that Democrats will talk about “Republicans’ failure to govern and failure to lead, and we will be living in a totally new political and economic environment. And I’m not sure the market’s going to adjust very well to that.”

For the tax reform to be possible, Baca hopes the administration will be able to unify its majority in Congress and remove the potential for the Border Adjustment Tax. “I don’t know any senator on the record right now who supports that,” he said about the bill.
“I think it’s really imperative now that the president show the leadership now that he said he could deliver, that dealmaking that a lot of people voted on, and come forth with a plan that unifies the country,” said Baca.

Baca also said that without the reform, the current business environment is a mixed bag. “I would argue that for the last four or eight years, the regulatory and tax environment hadn’t been very favorable to businesses.”

“A lot of corporations still did very well. A lot of individuals still did very well. I think a lot of people moved past that. Now, I think the question is, ‘Is that sustainable over the long term?’ And I think the answer is ‘no’.”

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