GOP To Release Tax Overhaul As Trump Says Rich Won’t Benefit
Republicans prepare for legislative sprint on a plan they expect would cut taxes for the wealthy.
By Richard Rubin
The Wall Street Journal
September 14, 2017
President Donald Trump said Wednesday the emerging Republican tax proposal won’t cut taxes for the wealthy, and they may go up, an assurance that appeared to contradict the plan that his administration and GOP leaders are drafting.
Mr. Trump, speaking before a meeting with a bipartisan group of House members, said he expects wealthy Americans “will not be gaining at all” under the tax overhaul he wants Congress to pass with a view toward creating new jobs and helping middle-class taxpayers.
“The wealthy will be pretty much where they are,” Mr. Trump, a Republican, said. “If we can do that, we’d like it. If they have to go higher, they’ll go higher, frankly.”
GOP leaders, who are hoping to overhaul the nation’s tax code by year’s end, signaled they will release a more detailed framework for the high-priority initiative during the week of Sept. 25.
For months, Republican congressional leaders have been negotiating among themselves and with the White House behind the scenes, but their public comments have been vague. The looming announcement of tax details will set the stage for a series of tough votes pitting industries, geographic regions and GOP factions against one another.
If Mr. Trump insists that the wealthy don’t benefit from the tax changes, it would shake up the tax debate. But he made similar comments before without altering the core of his tax proposals. For instance an April statement released by the White House called for lowering top tax rates.
The comments were striking this time because they come so close to the release of the tax plan and on the heels of a narrow deal with Democrats last week on government funding, storm aid and raising the national-debt ceiling.
The contradictions point to the broader challenge the White House and congressional leaders face trying to unify a wide range of competing interests over taxes, even within the Republican Party.
Mr. Trump’s comment Wednesday sparked immediate derision from some Democrats. In a tweet linked to a news report quoting the president saying the rich won’t benefit, Sen. Ron Wyden of Oregon wrote: “Right, and next year I’m playing in the NBA.”
Republicans, including Mr. Trump, have been talking about repealing the estate tax, eliminating the alternative minimum tax, lowering taxes on capital gains and dividends, cutting taxes on corporations, reducing tax rates on individuals and creating a special lower tax rate for businesses that pay taxes on their owners’ individual tax returns.
Those proposals tend to benefit high-income households and would be difficult to square with Mr. Trump’s latest comments.
Republicans do want to eliminate the deduction for state and local taxes, which also benefits the top sliver of taxpayers and would counteract some of the other changes. However, they have identified few other changes that would prevent the top 1% of taxpayers from benefiting from rate cuts.
Republicans said the rate cuts on businesses and investment are essential to boosting the economy, and focusing on preventing tax cuts for the top 1% would drastically change their agenda.
“My goal is to lower taxes on every American if it’s possible, help them keep more of what they earn and encourage them to reinvest back in the local economy,” Rep. Kevin Brady (R., Texas), chairman of the House Ways and Means Committee, said after Mr. Trump’s remarks.
Mr. Brady outlined the fall schedule Wednesday. Republicans hope to finish the budget process—a prerequisite for fast-tracking a tax bill through the Senate without Democratic votes—by mid-October. The tax bill would come after that, and House Speaker Paul Ryan (R., Wis.) voiced confidence on Wednesday that the whole process could be done by the end of the year.
Republicans will have little margin for internal opposition on each vote because they’re likely to get few, if any, votes from Democrats, who say the plan is too tilted to high-income households and corporations.
“Instead of people talking past each other as is happening right now, there can be more of a direct discussion about where this is headed,” said Rep. Peter Roskam (R., Ill.)
Republicans generally agree that they want lower tax rates and a simpler system, but they’re split on how deeply they want to cut taxes and whether any of the tax cuts will expire. Those divides must get bridged soon because some of these issues must be embedded in the budget resolution.
That budget resolution will set the size of any tax cut. Under the fast-track rules known as reconciliation, the tax bill can’t increase deficits beyond the length of the budget, typically 10 years. Getting an agreement could be a particular challenge in the Senate, where Republicans control 52 of the 100 seats.
Congress should make the budget window as long as 30 years and set the tax cuts to expire far in the future, Sen. Ted Cruz (R., Texas) said on Wednesday. That is almost as good as a permanent tax cut, he said, echoing the calls for deep tax cuts made by Sens. Rand Paul (R., Ky.) and Pat Toomey (R., Pa.).
Mr. Cruz said Congress should “dispense with the handcuffs of revenue-neutrality,” the idea that a new tax system should raise just as much money as the old one. Mr. Ryan wouldn’t answer directly on Wednesday when asked by the Associated Press whether the bill should be revenue neutral.
The House budget is in a rough spot, too. It came out of committee in July, but House leaders haven’t put it up for a vote yet. Conservatives have been balking at adopting a budget without tax details and they’re insisting on tying spending cuts to the tax bill.
The need to pass a budget has created a bit of a conundrum for the GOP. Some Republicans, including Rep. Mark Meadows of North Carolina, the leader of a conservative group of lawmakers, have been clamoring for more details on the evolving tax plan before they are willing to advance the budget. But the tax bill’s writers need the budget and its revenue targets so they can lay out all the specific details.
“We need it like now. ASAP,” said Rep. Dave Brat (R., Va.) “They’ve been promising that to us for four or five months. ‘We’re going to get you the bullet points, we’re going to get you the details.’”
Mr. Brady has been working with top officials from the Senate and the Trump administration on the GOP tax agenda this year. Their goals are to lower tax rates and simplify the tax system, but they are struggling with the arithmetic and political choices needed to get there.
Mr. Trump met Wednesday with a bipartisan group of House members on taxes after meeting with a bipartisan group of senators Tuesday night. Mr. Ryan said he would bet that some House Democrats will vote for the eventual tax bill.
Rep. Henry Cuellar (D., Texas) said Mr. Trump told the group he was going to give bipartisanship “a shot” on taxes. “If it doesn’t work, we’ll go back to the old way,” Mr. Trump told the group, according to Mr. Cuellar.
House Republicans are trying, as much as possible, to work from the same framework as the Senate and Mr. Trump’s administration so that any disputes are over finer points and not the broad aims and outlines.
Lawmakers are still working through the trade-offs needed to drive down tax rates. Mr. Trump wants to lower the 35% corporate tax rate to 15%, though most analysts think that is nearly impossible.
”You can get it to 20, but everybody’s going to come in and complain. So then you just have to assume that’s going to get back up to 25. It depends how many people complain,” said Rep. Devin Nunes (R., Calif.). “If we’re below 25, I think it would be good.”
House Republicans are bracing for a flurry of interest-group lobbying once they show which tax breaks would get curtailed.
Limits on the deduction for business interest would meet resistance from the private equity, real estate and agriculture industries.
“You could scale that,” said Sen. John Thune (R., S.D.). “You don’t have to do away with the deductibility of interest expense, but there are some ways in which you could probably achieve some savings.”
House members from New York and New Jersey are resisting a plan to repeal the deduction for state and local taxes.
“I want to keep an open mind,” said Rep. Tom Reed (R., N.Y.). “We can’t do tax reform with the mind-set we’re just going to carry forward the status quo.”
He also floated the idea of scaling back the state and local tax deduction instead of eliminating it.
Scaling back tax breaks instead of repealing them would make it harder for lawmakers to lower tax rates, potentially eroding support from Republicans looking for as deep a rate cut as possible.
“It needs to be substantial or you’re going to be having some people who have problems with it,” Rep. Mark Walker (R., N.C.) said.
President Donald Trump said Wednesday the emerging Republican tax proposal won’t cut taxes for the wealthy, and they may go up, an assurance that appeared to contradict the plan that his administration and GOP leaders are drafting.
Mr. Trump, speaking before a meeting with a bipartisan group of House members, said he expects wealthy Americans “will not be gaining at all” under the tax overhaul he wants Congress to pass with a view toward creating new jobs and helping middle-class taxpayers.
“The wealthy will be pretty much where they are,” Mr. Trump, a Republican, said. “If we can do that, we’d like it. If they have to go higher, they’ll go higher, frankly.”
GOP leaders, who are hoping to overhaul the nation’s tax code by year’s end, signaled they will release a more detailed framework for the high-priority initiative during the week of Sept. 25.
For months, Republican congressional leaders have been negotiating among themselves and with the White House behind the scenes, but their public comments have been vague. The looming announcement of tax details will set the stage for a series of tough votes pitting industries, geographic regions and GOP factions against one another.
If Mr. Trump insists that the wealthy don’t benefit from the tax changes, it would shake up the tax debate. But he made similar comments before without altering the core of his tax proposals. For instance an April statement released by the White House called for lowering top tax rates.
The comments were striking this time because they come so close to the release of the tax plan and on the heels of a narrow deal with Democrats last week on government funding, storm aid and raising the national-debt ceiling.
The contradictions point to the broader challenge the White House and congressional leaders face trying to unify a wide range of competing interests over taxes, even within the Republican Party.
Mr. Trump’s comment Wednesday sparked immediate derision from some Democrats. In a tweet linked to a news report quoting the president saying the rich won’t benefit, Sen. Ron Wyden of Oregon wrote: “Right, and next year I’m playing in the NBA.”
Republicans, including Mr. Trump, have been talking about repealing the estate tax, eliminating the alternative minimum tax, lowering taxes on capital gains and dividends, cutting taxes on corporations, reducing tax rates on individuals and creating a special lower tax rate for businesses that pay taxes on their owners’ individual tax returns.
Those proposals tend to benefit high-income households and would be difficult to square with Mr. Trump’s latest comments.
Republicans do want to eliminate the deduction for state and local taxes, which also benefits the top sliver of taxpayers and would counteract some of the other changes. However, they have identified few other changes that would prevent the top 1% of taxpayers from benefiting from rate cuts.
Republicans said the rate cuts on businesses and investment are essential to boosting the economy, and focusing on preventing tax cuts for the top 1% would drastically change their agenda.
“My goal is to lower taxes on every American if it’s possible, help them keep more of what they earn and encourage them to reinvest back in the local economy,” Rep. Kevin Brady (R., Texas), chairman of the House Ways and Means Committee, said after Mr. Trump’s remarks.
Mr. Brady outlined the fall schedule Wednesday. Republicans hope to finish the budget process—a prerequisite for fast-tracking a tax bill through the Senate without Democratic votes—by mid-October. The tax bill would come after that, and House Speaker Paul Ryan (R., Wis.) voiced confidence on Wednesday that the whole process could be done by the end of the year.
Republicans will have little margin for internal opposition on each vote because they’re likely to get few, if any, votes from Democrats, who say the plan is too tilted to high-income households and corporations.
“Instead of people talking past each other as is happening right now, there can be more of a direct discussion about where this is headed,” said Rep. Peter Roskam (R., Ill.)
Republicans generally agree that they want lower tax rates and a simpler system, but they’re split on how deeply they want to cut taxes and whether any of the tax cuts will expire. Those divides must get bridged soon because some of these issues must be embedded in the budget resolution.
That budget resolution will set the size of any tax cut. Under the fast-track rules known as reconciliation, the tax bill can’t increase deficits beyond the length of the budget, typically 10 years. Getting an agreement could be a particular challenge in the Senate, where Republicans control 52 of the 100 seats.
Congress should make the budget window as long as 30 years and set the tax cuts to expire far in the future, Sen. Ted Cruz (R., Texas) said on Wednesday. That is almost as good as a permanent tax cut, he said, echoing the calls for deep tax cuts made by Sens. Rand Paul (R., Ky.) and Pat Toomey (R., Pa.).
Mr. Cruz said Congress should “dispense with the handcuffs of revenue-neutrality,” the idea that a new tax system should raise just as much money as the old one. Mr. Ryan wouldn’t answer directly on Wednesday when asked by the Associated Press whether the bill should be revenue neutral.
The House budget is in a rough spot, too. It came out of committee in July, but House leaders haven’t put it up for a vote yet. Conservatives have been balking at adopting a budget without tax details and they’re insisting on tying spending cuts to the tax bill.
The need to pass a budget has created a bit of a conundrum for the GOP. Some Republicans, including Rep. Mark Meadows of North Carolina, the leader of a conservative group of lawmakers, have been clamoring for more details on the evolving tax plan before they are willing to advance the budget. But the tax bill’s writers need the budget and its revenue targets so they can lay out all the specific details.
“We need it like now. ASAP,” said Rep. Dave Brat (R., Va.) “They’ve been promising that to us for four or five months. ‘We’re going to get you the bullet points, we’re going to get you the details.’”
Mr. Brady has been working with top officials from the Senate and the Trump administration on the GOP tax agenda this year. Their goals are to lower tax rates and simplify the tax system, but they are struggling with the arithmetic and political choices needed to get there.
Mr. Trump met Wednesday with a bipartisan group of House members on taxes after meeting with a bipartisan group of senators Tuesday night. Mr. Ryan said he would bet that some House Democrats will vote for the eventual tax bill.
Rep. Henry Cuellar (D., Texas) said Mr. Trump told the group he was going to give bipartisanship “a shot” on taxes. “If it doesn’t work, we’ll go back to the old way,” Mr. Trump told the group, according to Mr. Cuellar.
House Republicans are trying, as much as possible, to work from the same framework as the Senate and Mr. Trump’s administration so that any disputes are over finer points and not the broad aims and outlines.
Lawmakers are still working through the trade-offs needed to drive down tax rates. Mr. Trump wants to lower the 35% corporate tax rate to 15%, though most analysts think that is nearly impossible.
”You can get it to 20, but everybody’s going to come in and complain. So then you just have to assume that’s going to get back up to 25. It depends how many people complain,” said Rep. Devin Nunes (R., Calif.). “If we’re below 25, I think it would be good.”
House Republicans are bracing for a flurry of interest-group lobbying once they show which tax breaks would get curtailed.
Limits on the deduction for business interest would meet resistance from the private equity, real estate and agriculture industries.
“You could scale that,” said Sen. John Thune (R., S.D.). “You don’t have to do away with the deductibility of interest expense, but there are some ways in which you could probably achieve some savings.”
House members from New York and New Jersey are resisting a plan to repeal the deduction for state and local taxes.
“I want to keep an open mind,” said Rep. Tom Reed (R., N.Y.). “We can’t do tax reform with the mind-set we’re just going to carry forward the status quo.”
He also floated the idea of scaling back the state and local tax deduction instead of eliminating it.
Scaling back tax breaks instead of repealing them would make it harder for lawmakers to lower tax rates, potentially eroding support from Republicans looking for as deep a rate cut as possible.
“It needs to be substantial or you’re going to be having some people who have problems with it,” Rep. Mark Walker (R., N.C.) said.
Article Link To The WSJ:
0 Response to "GOP To Release Tax Overhaul As Trump Says Rich Won’t Benefit"
Post a Comment