David D. Stewart: Welcome to the podcast. I'm David Stewart, editor in chief of Tax Notes Today International. This week: majority view.

It's been almost a month since President Trump signed the One Big Beautiful Bill Act into law, a massive tax package championed by Republicans in Congress. To get an insider's view of this bill, we've been sitting down with current members of Congress on the House Ways and Means Committee.

Last week, we talked with Representative Steven Horsford, the leader of the New Democrat Coalition's tax task force. You can find a link to that interview in the show notes. This week, Tax Notes Capitol Hill reporter Cady Stanton interviewed Representative Adrian Smith, a Republican from Nebraska, to discuss the new tax law and the Republican Party's priorities.

This episode is part of an ongoing series on the One Big Beautiful Bill Act, and as we continue to dive deep into the most important tax changes and provisions in the coming weeks, or even months, we'd like to hear from you. If there's an aspect of the bill that you'd like to hear more about, please email us at podcast@taxanalysts.org.

Now I should note before we get started that, due to some scheduling issues, we had limited time with Representative Smith, but Cady made the most of it. Let's go to that interview.

Cady Stanton: Congressman Smith, thanks for joining us.

Rep. Adrian Smith: Thank you. Great to be with you.

Cady Stanton: I know you and your colleagues have been working on this tax-focused reconciliation bill for months — if not years — leading up to the bill's passage and the scheduled expiration for large swaths of the Tax Cuts and Jobs Act. Could you talk a little bit about the culmination of that work and what you were able to accomplish in this bill?

Rep. Adrian Smith: Well, the bill, as you said, it's a result of many years of preparation. I even include the preparation that went into the 2017 TCJA. That was particularly important. Doing our homework, I was asked to head up a financial services working group by then-Chairman Dave Camp. All that process has been, I think, very instructive. Then certainly, as TCJA was carried out and deemed to be very effective — even a lot of our Democrat colleagues supported that — last year in a lot of those business provisions, in addition to the family provisions.

Cady Stanton: One aspect of the bill that changed between the House and Senate versions leading up to final passage was the treatment of clean energy tax credits from the Inflation Reduction Act. Do you think the changes that were made in the final bill are set in stone, or is there any appetite to maybe go back and adjust the phaseouts set by the bill, either with more or less severe restrictions?

Rep. Adrian Smith: Well, I suppose we could relitigate a lot of things that we do, but I think it's important that, as we do move forward — number one, there's, I would say, a lot of controversy on, say, wind and solar. And not just tax credits, but the actual construction of those projects in various jurisdictions. Certainly, my district included. Building solar farms in the middle of the country, that doesn't make a lot of sense, especially when so many taxpayer dollars are involved as well.

I try to keep an open mind as to how we can think about innovation moving forward. Obviously, sustainable aviation fuel — that has shown some promise. I try to look at everything on their merits, all the issues on their merit, and take them one at a time. But also, passing legislation should have some meaning moving forward, and I would imagine that there will be an effort to change that at some point, but I would have a hard time thinking there would be a lot of support for something that's much different than what we passed.

Cady Stanton: Pivoting more to the international tax side here — section 899, also referred to as the revenge tax, made a lot of news when it was included in the House bill, and subsequently removed following the announcement about this agreement between the United States and other G7 countries.

How do you see the future of that kind of retaliatory tax measure? Is there a chance it returns, depending on how work with the OECD progresses or faces hurdles? How do you see that playing out?

Rep. Adrian Smith: Well, I think we heard a message from our trade partners, for example, other countries, friendly countries, certainly, that they want to cooperate with us. We don't want U.S. companies penalized and I think we want to send that strong message. We'll see; we'll keep our options open moving forward, depending on how other countries and what their posture ends up being as we do move forward.

Cady Stanton: Staying in that area, you also serve as the chairman of the Ways and Means subcommittee on trade. Could you speak a little bit to how your caucus and your party were able to balance addressing international tax in the bill, and the knowledge of the ongoing tariff plan by President Trump that was occurring at the same time?

Rep. Adrian Smith: Sure. There's such a stark contrast, in terms of trade agenda. The Trump administration, even going back to the first administration, [had] a very vigorous trade agenda that was interrupted by President Biden, who didn't really have a trade agenda.

I'm not a fan of tariffs. I understand they're a tool in the toolbox. I certainly would not want to codify tariffs in the law. Yes, some are saying that it delivers some revenue that we could work with on other parts of legislation. But I think as the president moves forward, we've seen other countries now coming to the table. I was told not that long ago by the U.K. that agriculture was just not within reach. That is changing. I'm happy to say that that posture seems to have changed. We have seen a good bit of movement in the right direction, beef and ethanol being a couple of those things that have shown very positive developments.

As the president continues to negotiate trade with other countries, I think the president understands that for something to last beyond his administration, Congress will need to codify that. I think that that's to be expected; we'll see how those agreements come together. I appreciate the fact that trade is a priority. I think we suffered greatly when trade was not a priority under the previous administration, especially when President Biden had an opportunity to do more and chose not to. Especially — it's a little bit rich as we hear the opposition say President Trump's proposed tariffs — the Democrats are opposed to that and yet chose not to do anything when they had full power to do so. Well, on that topic and maybe a few others, too.

I'm not a fan of codifying tariffs in statute. Let's have the president negotiate a deal, and then should there be the votes in Congress to codify that moving forward, that could be a good opportunity to establish good trade partnerships around the world.

Cady Stanton: One provision that wasn't able to hitch a ride on this bill is a tax agreement with Taiwan, which had previously passed the House but not made it through the Senate. Is that something that you think might be able to get over the finish line this Congress? How much of a priority is it for you and other House taxwriters?

Rep. Adrian Smith: Well, I think that issue has had some bipartisan support. I go back to when then-Speaker [Kevin] McCarthy led the gathering with the president of Taiwan in California at the Reagan Library. Incidentally, that was a very bipartisan event. I certainly told my Democrat counterparts that I appreciated their participation with that. There's good bipartisan agreement there. I would think it's something that can be addressed moving forward.

Cady Stanton: Last week, we spoke with your colleague on the tax committee, Representative Steven Horsford [D-Nev.], about the New Democrat Coalition's tax priorities. From your perspective, how would you articulate Republicans' main tax priorities, especially within the context of what you've recently advanced with the One Big Beautiful Bill?

Rep. Adrian Smith: I'd say freedom and opportunity. Opportunity for everyone. When I look at the various parts of the bill, there's something for everyone. I think that when we want to encourage investment and productivity, that's what we saw very successfully done with TCJA, so we want to see that moving forward as well.

I know that there was a lot of discussion — my colleague Mr. Horsford, he was talking about people making $2.13 an hour. I want the record to reflect that that doesn't happen. Tips are involved. Yes, a tipped wage, but an employer must ensure that an employee must be paid the overall minimum wage, not just the tipped minimum wage at the end of that pay period. I want the record to reflect that.

The president had his priority: tax relief for tip earners, tax relief for seniors. We had the guardrails of reconciliation that we had to work with, say Social Security aspects and so forth. We weren't able to have full rein over all that policy, but I think we settled on a really good place that offers tax relief for hardworking Americans. I think they will feel that very soon.

Cady Stanton: I know lawmakers and reporters alike are still catching their breath a bit after this reconciliation process. But now that it's been a few weeks, can you speak to what House Republicans' next tax priorities might be? Are there any tax provisions that didn't make it into this bill that you're hoping to maybe go to bat for moving forward?

Rep. Adrian Smith: Oh, there's some things, they're not the really big items. I think we want to be mindful hearing from our constituents, what is appropriate moving forward, and what is most useful, helpful. The bill — it was large and it certainly contained a lot. I think it will be very good for our economy and opportunity, workers. Great for wage earners.

When you see how effective our efforts were in 2017, where wages grew faster — at a higher rate — than executive compensation. Of course, then we saw inflation kick in because of some policies. Gosh, I would hope that we would see more bipartisan interest in getting us back to those really good places before inflation. Let's avoid the policies that trigger inflation and be able to see workers do well once again.

Cady Stanton: What kind of vehicle for maybe a few other provisions do you imagine might come next? Could there be more reconciliation bills this Congress? Would it be some other kind of vehicle for moving tax priorities forward? What are you imagining?

Rep. Adrian Smith: Well, there is the discussion that has just begun to start over what a second reconciliation package might look like. I want to keep an open mind there and generate the conversations that need to take place before we get something like this done. I think back in January, say, when there was the debate over is it going to be one bill or more — I think, as Chairman Jason Smith [R-Mo.] really emphasized, that the single bill was the best strategy moving forward. I certainly supported him on that argument as well.

Some of the immigration issues — I don't think we were expecting illegal border crossings to be down some 90 percent even without any new legislation in place. Let's see how things move along here in the next few weeks, next couple of months, to see what might be necessary moving forward.

I'm always interested in what we can do to reduce bureaucracy. I see growing agencies that are not delivering a more efficient product. That should concern all of us, certainly as taxpayer dollars are involved in supporting the bureaucracy. But then, the opportunity cost. What are some of those opportunity costs that are taking place because of the bureaucracy pushing back on innovation or new ideas that don't seem to fit well within some bureaucrats' minds who have a great deal of authority?

Cady Stanton: You mentioned bureaucracy and government agencies there. How do you think your caucus plans to treat IRS policy this Congress? Both in terms of funding for the agency and other areas, perhaps the Direct File program, which I know is something you've spoken to before.

Rep. Adrian Smith: Right. I think the Direct File, that speaks for itself in terms of what we've already done. When you really break down the cost of how much each tax return is, that's a great example of the bureaucracy not being efficient. I think overall, customer service at IRS is something that's been on my mind, and I think many of my other colleagues' minds as well. Rather than just trying to throw all of these enforcement agents out across the economy — which that didn't even pan out even when they had the resources to do that, couldn't hire enough people, and so forth — I think if the IRS took a really good, effective posture at customer service, I think compliance would follow suit. I think taxpayers would certainly be more pleased as they seek to have their questions answered, as complex as they sometimes can be.

Cady Stanton: House Republicans have obviously already targeted some rollbacks for IRS funding in annual appropriations, as well as rollbacks from the large amount of funding the agency got from the Inflation Reduction Act. Do you have any concerns about the impact on customer service or on taxpayers who are filing, given those rollbacks and changes in funding, alongside what is a shrinking number of personnel at the agency?

Rep. Adrian Smith: Well, I need to be convinced that new technologies have been employed before just adding a long list of full-time new employees. Again, it's hard to find employees these days. That probably begs a broader conversation. But IRS is similar to other bureaucracies that I think can be distracted, that doesn't seem to even really want to use newer technologies. I want to be mindful of what — and have these discussions of how can we see the IRS be more efficient in carrying out their responsibilities.

Their work is important, let me be very clear. Their work is very important. We know that important work like that can be more effective with good, positive customer service and responsiveness to taxpayers, like I said, so that they can get their questions answered. Because especially with changes in the tax code moving forward, we just want to make sure that customer service is a high priority at IRS.

Cady Stanton: One other aspect of tax policy you mentioned is maybe some bipartisan work. I've heard a little bit about the idea of a bipartisan bill maybe at the end of this year for some tax extenders, and I know there's a couple of unaddressed bipartisan tax measures, like the work opportunity tax credit and Affordable Care Act premium tax credits that there's been some conversation around.

Do you think there's the appetite there, both across the aisle and within your caucus, to work together on some kind of tax bill at the end of this year, or even just sometime this Congress?

Rep. Adrian Smith: Well, I always remind folks that there's far more bipartisanship that takes place on the House side, probably the Senate side as well, than really gets covered. I think there's bipartisan interest here; let's see what the issues are.

I also think that it's important that, as extenders are proposed, what is the exit strategy? Is it permanent policy or is it letting something sunset? Let's sort those issues out. I think we need to have those discussions, and we shouldn't shy away from these conversations that do need to happen.

Cady Stanton: Great. Well, this has been a fantastic conversation. Thanks so much for joining us, congressman. We really appreciate your time.

Rep. Adrian Smith: You bet. Have a good day.

David D. Stewart: That's it for this week. You can find me online @TaxStew, that's S-T-E-W, and be sure to follow @TaxNotes for all things tax. If you have any comments, questions, or suggestions for a future episode, you can email us at podcast@taxanalysts.org. And as always, if you like what we're doing here, please leave a rating or review wherever you download this podcast. We'll be back next week with another episode of Tax Notes Talk.

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