I spoke to Gideon Resnick of the Daily Beast about the surprising result in the Virginia gubernatorial primary that perhaps shouldn’t have been so surprising in hindsight.

“In this party at this political moment, an anti-establishment firebrand pushing identity politics was bound to get some traction with a staid mainstream Republican as the foil,” Liam Donovan, a Virginia-based former GOP operative, told The Daily Beast. “Throw in a third party, a competitive Dem race, conventional wisdom of a Gillespie rout, and an increasingly ‘selective’ denominator, and you get what we saw tonight.”

Read the entire piece here.

I spoke with Bernie Becker who writes POLITICO‘s Morning Tax tipsheet about the repeal of the infamous Kansas tax cuts and whether it will have an impact on the federal tax reform debate:

Here’s one explanation that was offered for why the two are an imperfect comparison — the design of the Kansas tax cuts, which totally erased taxes on pass-throughs, was so bad that it’s hard to even contemplate anything like it passing in D.C. “I don’t know how you could possibly replicate it at the federal level,” said Liam Donovan, the director of legislative and political affairs at Associated Builders and Contractors and a former top staffer at the National Republican Senatorial Committee. “It’s so egregious — we’re talking about pass-throughs paying zero. It’s almost cartoonish.”

You can read the rest here.

While it didn’t make the story, I laid out for Bernie why the comparison is being misapplied, and how the real lesson of Kansas is being ignored, echoing my tweetstorm from a few weeks back:

It’s not that pass-throughs are bad. It’s not even that steep tax cuts are bad. [But] if you make one business structure wildly preferential, people will seek it out. And if exempt it from tax altogether, katy bar the door.

So you want to invoke Kansas to argue cuts won’t pay for themselves? Fine. But don’t use it to demonize pass-thrus when that mangles the point.

If anything, Kansas experience underscores why it’s important to have equal (or at least similar) treatment regardless of business structure. Should that mean a 15% rate for all? Maybe, maybe not. But you certainly can’t have a 20pt chasm between Main Street and the Fortune 500.

Neither the Trump plan nor the House blueprint would exempt pass-throughs a la Kansas. Nor would either advantage them over C-corps. Only in the administration’s proposal would even be on equal footing.

Bottom line: using the example of Kansas to argue against pass-through parity is at best inapt, and at worst self-defeating. Rate disparities inevitably distort behavior, and a large gap between C-corp and pass-throughs would have a similar effect, just in the other direction.

I spoke to Bloomberg’s Sahil Kapur about Trump’s bumpy week and how it might impact the GOP legislative agenda.

Still, the legislative agenda is on shaky enough ground as it is, according to Liam Donovan, a lobbyist and former Republican aide.

“Sausage making is hard enough outside the media vortex of President Trump,” Donovan said. “Each blow complicates the political calculations, strains relations between the White House and Congress, diminishes the President’s leverage, and raises the specter of bigger shoes” to drop, he said.

Full piece here.

I’d add (and did, though it didn’t make it into the piece) that the calendar is already taxed to the breaking point, and that given the health care-tax reform parlay they’ve set up you run the risk of turning the legislative year into a binary event. Without knowing what the future holds, Congressional Republicans would be wise to act swiftly to lock in whatever policy wins they can, even if that means playing small ball.

I spoke with Bloomberg View‘s Frank Wilkinson about the emerging policy and political void as the blank slate of the campaign trail gives way to the legislative and bureaucratic Thunderdome.

Power doesn’t so much concentrate in the White House as shrink there.

“The same problem extends to the broader administration where you can’t fill out a government because many who are qualified aren’t interested, most who are interested aren’t qualified, and among the few who are both you’re seeing people disqualified based on perceived loyalty issues,” Donovan said.

The Trump team, continued Donovan, seems to believe “they can shrink government and/or limit internal sabotage by simply not filling many of these positions — the problem with this approach is that you’re just dividing the same amount of power fewer ways, ceding a ton of it to career bureaucrats by default, for better or worse.”

…

“Politically,” said Donovan, “I’d argue it’s less of a vacuum and more of an eclipse. Trump blocks out the political sun for any and all Republicans, much to the delight of the opposition.”

Read the full piece here.

While the broad strokes of the House Ways & Means Blueprint are promising, there are still potential pitfalls in the details, well beyond the DBCFT fight. I spoke with Richard Rubin from the Wall Street Journal about the treatment of pass-through business income:

Republicans want to lower the tax rate for these businesses in conjunction with corporate rate cuts. But they haven’t decided what should be taxed at 25%, as a firm’s business income, and what should be taxed at 33%, as the owner’s wages at the firm.

…

They have a few choices, said a House GOP aide. One is a pure numerical split, allocating, say, 70% of pass-through income to wages and 30% to business profits. That is simple but politically toxic.

“It’s not a real 25% rate. That’s more like a 31% rate, in which case you’ve got trouble,” said Liam Donovan, director of legislative and political affairs at Associated Builders and Contractors, a trade group. “Using a blunt instrument is a non-starter.”

You can read the full piece by clicking here.