Trump makes pitch for U.S. tax overhaul
He vows comeback of ‘Main Street’
SPRINGFIELD, Mo. — President Donald Trump began his fall push to overhaul the nation’s tax system by pledging Wednesday that the plan would “bring back Main Street” by reducing the tax burden on middle-class Americans.
Trump said his vision for rewriting the tax system, a key campaign pledge, would unlock stronger economic growth and benefit companies and workers alike. He promised that it would be “pro-growth, pro-jobs, pro-worker and pro-American.”
Trump also touted the prospect of the “biggest ever” tax cut and warned that without it, “jobs in our country cannot take off the way they should. And it could be much worse than that.”
The president did not provide details of the tax plan, but he outlined four principles that he’s referred to before — simplifying the tax code and closing
some provisions that benefit wealthy Americans and special interests; slashing the corporate rate to create more jobs and higher wages; providing tax relief for middle-class families; and cutting the tax that companies would pay to bring back the trillions of dollars in profit that they currently hold offshore.
Trump debuted his tax-overhaul pitch before employees at the Loren Cook Co. manufacturing plant in Springfield, Mo., a community known as the birthplace of Route 66, one of the nation’s original highways, and one known as America’s Main Street.
“This is where America’s Main Street will begin its big, beautiful comeback,” the president declared.
After eight months without any major legislative victories and after a defeat on health care, Trump and Republican congressional leaders face mounting pressure to notch some significant achievements before next year’s midterm elections. But the tax-overhaul effort already is facing political head winds.
The White House and Republican lawmakers have not finalized details of the plan, and the push comes as Congress returns to face an intense September workload filled with must-do items such as raising the debt limit, funding the government and providing assistance for the Harvey storm recovery effort.
While the White House has been designing a tax plan aimed at appealing to Republicans, Trump sought to cast the effort in bipartisan terms. He called on members of both parties to work with him on a “once-in-a-generation opportunity to deliver real tax reform for everyday hardworking Americans.”
“I am fully committed to working with Congress to get this job done — and I don’t want to be disappointed by Congress, do you understand?” Trump said. “Do you understand? Congress. I think Congress is going to make a comeback.”
The president used the official White House event to inject an overtly political message aimed at U.S. Sen. Claire McCaskill, D-Mo., a top Republican target in next year’s midterm elections.
“We must lower our taxes, and your senator, Claire McCaskill, she must do this for you. And if she doesn’t do it for you, you have got to vote her out of office,” Trump said, drawing out each of the last five words for emphasis.
The president also called out Democrats for “looking to obstruct tax cuts and tax reform, just like they obstructed so many other things, including administrative appointments and health care.”
DEMOCRATS’ CONDITIONS
Even before Trump took the stage, Democrats laid down their own markers for what the tax plan should look like.
Senate Minority Leader Charles Schumer outlined a series of conditions, telling re porters that the tax cuts should not go to the wealthiest 1 percent of Americans. The Democrat from New York added that the plan should not increase the budget deficit and should be written by both parties — not just Republicans, who led an effort to repeal and replace the Patient Protection and Affordable Care Act and failed.
“If the president wants to use populism to sell his tax plan, he ought to consider actually putting his money where his mouth is” and cut taxes for the middle class, not the richest Americans, Schumer said.
The Trump administration released a one-page set of goals in April for its tax overhaul, followed by a joint statement in July with congressional leaders.
In an interview with the Financial Times last week, Gary Cohn, a top Trump economic adviser, said the White House and Republican leaders had agreed on a “good skeleton” for the plan, and said the tax-writing committee in the House would be drafting legislation while the White House tries to sell it.
Trump said he would like to see the top corporate tax rate drop from 35 percent to 15 percent. But it’s not clear that the top rate will go that low in the plan or what kind of tax break a typical taxpayer would see.
His administration has asserted that high corporate tax rates primarily hurt workers, since companies can stash their money overseas in countries with lower tax rates.
“Lower taxes on American business means higher wages for American workers and it means more products made right here in the USA,” Trump said Wednesday.
Trump’s Treasury Department has cited a 2006 Congressional Budget Office study to back the claim that workers mostly bear the brunt from corporate taxes, as well as research by Kevin Hassett, the economist picked to lead the White House Council of Economic Advisers.
But Treasury officials concluded in a separate 2012 analysis that only 18 percent of corporate taxes’ costs fell on labor. This would suggest that Trump’s plan is more likely to
bolster stock prices and CEO pay than trickle down to workers’ salaries.
Also Wednesday, Trump noted, as critics of the tax code often do, that the U.S. corporate rate is “dead last” among industrialized nations.
“We have totally surrendered our competitive edge to other countries,” Trump said. “We’re not surrendering any more.”
But many companies pay a lower corporate rate by using deductions in the tax code. And while the corporate tax rate is the highest of the 35 advanced economies in the Organization for Economic Cooperation and Development, the overall U.S. tax burden is among the lowest.
U.S. tax revenue as a share of total economic output was 26 percent in 2014, the fourth-lowest among nations in the bloc.
FEMA CUT REVISITED
Separately, a disaster-relief cut proposed before Harvey wreaked havoc in Texas is being reassessed, a House Appropriations Committee spokesman said Wednesday. The almost $1 billion cut was meant to help finance Trump’s proposed border wall.
“Circumstances have changed significantly since the bill was drafted earlier this summer,” spokesman Jennifer Hing said Wednesday. “Given the current situation, the committee is reassessing the issue.”
Trump has promised billions of dollars to help Texas rebuild from Harvey-caused flooding.
The pending reduction to the Federal Emergency Management Agency’s disaster relief account is part of a spending bill that the House is scheduled to consider next week when lawmakers return from their August recess.
The $876 million cut, which is included in the 1,305-page measure’s homeland security section, pays for roughly half the cost of Trump’s down payment on the U.S.-Mexico border wall that the president repeatedly promised Mexico would finance.
Aides have said the GOP leaders are likely to move to reverse the cut next week, as floodwaters in Houston, the nation’s fourth-largest city, and elsewhere have forced tens of thousands of Texans to seek refuge in shelters. There’s only $2.3 billion remaining in federal disaster coffers.
The FEMA cut is the handiwork of House Appropriations Committee Chairman Rodney Frelinghuysen, R-N.J. — the force behind a $50 billion-plus 2013 superstorm Sandy recovery package — and Rep. John Carter, whose home state of Texas is suffering from Harvey.
Trump is scheduled to meet with congressional leaders Wednesday. The meeting follows a recess that has seen Trump lambaste several top Republicans, especially Senate Majority Leader Mitch McConnell, R-Ky., after the collapse of the GOP health care bill in his chamber. That has wounded the president’s relationship with his own party.
“You’re not going to bully United States senators, this isn’t The Apprentice,” said Rep. Tom Cole, R-Okla., referring to Trump’s star turn on the reality television show.
Cole added: “You’re going to need their vote, and you ought to remember that they’re going to be at the table in every major deal you need for the next three years.”
McConnell is scheduled to attend the White House meeting, according to congressional aides. Also attending are Schumer; House Speaker Paul Ryan, R-Wis.; and House Minority Leader Nancy Pelosi, D-Calif., the aides said.
“We expect to hear their proposal for getting done all that we have to get done in September,” said Schumer spokesman Matt House.
Information for this article was contributed by Catherine Lucey, Ken Thomas, Josh Boak, Alan Fram, Andrew Taylor and Erica Werner of The Associated Press; by Jim Puzzanghera of the Los Angeles Times; and by Justin Sink, Toluse Olorunnipa and Lynnley Browning of Bloomberg News.