Rep. Kevin Brady: Trump's tax code overhaul will 'obliterate' incentives to move business abroad

Rep. Brady: Tax reform realities

The incoming administration's restructuring of the tax code will redesign international trade policies and create a level playing field by pushing U.S. businesses to conduct operations stateside, Rep. Kevin Brady told CNBC on Tuesday.

"[We are] making sure we eliminate every tax incentive to move jobs or resources or headquarters overseas," Brady, the head of the House Ways and Means Committee, told "Squawk Box."

Brady and other House Republican leaders proposed a blueprint for a corporate tax overhaul in June that Brady said was roughly 80 percent in line with President-elect Donald Trump's tax plan.

"Under our blueprint and under Mr. Trump's plan, as they're melded, if you want to access the U.S. market, if you want to access the world market, [the] U.S. is going to be the place to do that from," the Texas Republican said.

Brady said the plan would make the United States a "magnet for new investment" and encourage businesses to move their supply chains closer to, if not into, the country. The goal is to get capital flowing back into the U.S. by structuring taxes more favorably, he said.

"We don't lower the tax gate to bring those earnings back, we obliterate the tax gate going forward," he said.

And the way to bring earnings back to the United States is by taxing goods differently, according to Brady.

"We're proposing to move from an income tax based on where things are produced or where profits are booked to a cash flow tax based on where it's consumed," he said. "It's dramatically more pro-growth, and we couple that with a simpler, fairer tax code for families."

The plan, which proposes a corporate tax rate of 20 percent, has still worried some businesses.

Manufacturing companies that import materials used in their products will likely suffer from the tax code redesign, and even large exporters like Koch Industries have expressed concern that the economy might suffer from higher consumer prices and less free trade.

One of the plan's provisions, a wage deduction that offsets higher import costs and makes it cheaper to employ workers, may also face resistance from the World Trade Organization, which does not allow countries to deduct wages from taxation as the move could be seen as giving U.S. companies unfair subsidies and creating trade barriers.

Still, Brady was confident that, with Trump's support, the new administration would be able to make bold strokes.

"I haven't met a Republican yet in Congress who isn't all in on fixing this broken tax code, and not just tweaking a few things, going bold," Brady said.