WHAT TRUMP’S TAX PLAN WOULD MEAN FOR YOU
Republicans trumpet agreement, but they’re not past the talking phase
President Trump and Republicans who control the House and Senate said Wednesday there was broad agreement for a once- in- a- generation rewrite of the tax codes to lower corporate and individual tax rates while streamlining deductions and credits.
“This is quite an historic day for us and one that we’ve been looking forward to for a long time, and one we’re very excited about,” National Economic Council director Gary Cohn said Wednesday at the White House. “President Trump has made tax reform a priority, and we have a Republican Congress that wants to get it done.”
Although Cohn and Treasury Secretary Steven Mnuchin said there was 100% agreement among leaders on the broad strokes, the reality is that the release of a onepage summary of Trump’s tax principles marks only the beginning of a long and tangled process. Your 2017 tax form may look an awful lot like your 2016 tax form.
And there are enough potholes ahead to completely derail efforts at change.
Trump did not propose specific legislation, so negotiations that have been happening all year — since the election, actually — will continue until the tax- writing committees in the House and Senate are ready to draft language into a bill.
Cohn and Mnuchin said many details had to be worked out, including how much average taxpayers would save. They are still deciding exactly which deductions and credits would be eliminated or reduced. Nearly every line item in the code has lobbyists working to protect it.
One of the most controversial aspects of a House Republican blueprint for corporate tax changes released last June was a process known as border adjustment.
Supporters such as House Ways and Means Committee Chairman Kevin Brady, R- Texas, said taxing imported products would help American manufacturers compete globally and remove incentives to move headquarters overseas. Critics said border adjustment would drive up consumer prices.
“There’s many aspects of it we like; there’s certain things that we’re concerned about,” Mnuchin said about border adjustment Wednesday. “We don’t think it works in its current form, and we’re going to continue to have discussions with [ House leaders] about revisions.”
Brady said the first tax hearings will start in the Ways and Means Committee soon, but they will mainly feature witnesses highlighting the benefits and drawbacks of different provisions.
UNCERTAINTY OVER PROCESS
Legislation to repeal and replace the Affordable Care Act, or Obamacare, may have to pass before the first procedural step on tax changes can be taken.
Republicans are entering uncharted waters in the use of a process known as reconciliation to get around Democrats’ ability to block legislation in the Senate.
To prevent Democrats from being able to filibuster a tax bill — which would require 60 votes to bring a bill to the floor when Republicans control only 52 seats — Senate Majority Leader Mitch McConnell said he would probably take up the tax overhaul using reconciliation, which cannot be filibustered.
Republicans are also trying to use reconciliation to prevent a filibuster on the health care bill. That process has begun, and it’s uncertain whether the rules allow for two reconciliation packages to move simultaneously.
The White House and House and Senate leaders have to decide what they want in the tax bill and introduce it. At that point, it will come under the most intense scrutiny, and attacks are likely from interest groups whose oxen would be gored.
The recent experience on the health insurance overhaul showed that even with a majority in the House and rules that can strictly control debate, Speaker Paul Ryan, R- Wis., has struggled to get some measures through his own conference.
The tax overhaul may not face the same fate, because some of the powerful conservative advocacy groups that peeled votes away from health care last month came out in support of Trump’s tax plan Wednesday.
THE VOTES
Getting the votes needed for passage may require Ryan and Brady to woo individual members with specific provisions, former repre- sentative Dave Camp, a Michigan Republican who was chairman of Ways and Means until 2015, said Wednesday.
Rep. Leonard Lance, R- N. J., said he supports lowering rates but would work to oppose a provision in Trump’s plan that would eliminate a deduction for state and local taxes. “New Jersey taxpayers would lose under that plan,” Lance said.
Any deal to appeal to the most conservative factions could lead the House to pass a bill that would lose the support of a handful of more moderate Republican senators. Republicans can’t afford to lose more than two votes in the Senate if they can’t attract any Democratic votes.
Mnuchin said that along with eliminating deductions and credits, the tax package would spur economic growth to make up for lost revenue.
Deficit hawks are concerned about the administration’s reliance on economic growth, and they pointed out that increasing the deficit by not offsetting tax cuts with spending cuts or other savings would create a drag on the economy.
“What they don’t want to see is that this tax reform is going to be paid for by magic,” said Maya MacGuineas, president of the Center for a Responsible Federal Budget. It remains to be seen whether Republicans who have been deficit hawks in Congress will accept the White House argument that growth will make up for lost revenue.
Democratic Senate leaders said they have not been invited into discussions. In the House, Brady had a meeting with Democrats and said he welcomes their ideas, but the discussion is working off a blueprint Brady and Ryan drafted during last year’s campaign, and it is not about building a bipartisan agreement.