A Road Map for GOP To Get Its Big Tax Win

New York Post - - POST OPINION - BETSY McCAUGHEY Betsy McCaughey is a se­nior fel­low at the Lon­don Cen­ter for Pol­icy Re­search.

HOUSE and Se­nate Repub­li­cans are rac­ing to ham­mer out a tax-cut agree­ment that blends the House bill passed on Nov. 16 with the Se­nate ver­sion that squeaked through at 2 a.m. Satur­day with one vote to spare. Fail­ure is not an op­tion. They must de­liver a fi­nal bill to the pres­i­dent for sign­ing be­fore Christmas. The stakes are high eco­nom­i­cally and po­lit­i­cally. For too long, Amer­ica’s un­com­pet­i­tive cor­po­rate-tax rates have sup­pressed growth and wages, and driven com­pa­nies to leave the United States.

If Repub­li­cans fail on tax re­form, they could lose their grip on Congress in the midterm elec­tions. That would leave Pres­i­dent Trump with­out a leg­isla­tive part­ner to push through his pro-growth agenda.

Here’s the road map for suc­cess: The House should adopt the Se­nate’s re­peal of the Oba­maCare penalty, and the Se­nate should agree to slash cor­po­rate taxes as of Jan. 1, 2018, not a year later as the Se­nate bill cur­rently says. De­lay­ing the cor­po­rate tax cuts risks an eco­nomic down­turn in 2018 and de­feat for GOP law­mak­ers next Novem­ber.

Se­na­tors post­poned the cor­po­rate-tax cut un­til 2019 in or­der to pare $127 bil­lion from the cost of tax re­form and stay within Se­nate rules.

But economist Arthur Laffer warns that de­lay­ing the cut will en­cour­age com­pa­nies to de­fer pro­duc­tion and in­come for a year so that their prof­its will be taxed at the lower rate. That could tank the econ­omy in 2018, and take the GOP ma­jor­ity in Congress down with it.

A safer bet to keep the cost of the bill within Se­nate rules is for GOP se­na­tors to em­brace the House’s pro­posal for a $1,600 child tax credit, in­stead of rais­ing it all the way to $2,000. That com­pro­mise would cut $150 bil­lion off the cost.

Dou­bling the child tax credit to $2,000, as the Se­nate bill does, and pay­ing for it by de­lay­ing cor­po­rate tax cuts, is a whop­ping mis­take.

“Yes, ev­ery­body likes lit­tle kids. But not ev­ery­one has them. Only a small seg­ment of the pop­u­la­tion ben­e­fits from that credit,” ex­plains economist Larry Kud­low, a chief ar­chi­tect of the Trump tax plan. “Ev­ery­one will ben­e­fit” from re­duc­ing cor­po­rate tax rates im­me­di­ately. It’ll “cre­ate an in­vest­ment boom. There will be no losers.”

What should the House take from the Se­nate’s ver­sion? Ac­cord­ing to House ma­jor­ity leader Kevin McCarthy, his mem­bers are ready to adopt key Se­nate pro­vi­sions, in­clud­ing con­tin­u­ing to al­low home-buy­ers to deduct in­ter­est on up to a $1 mil­lion mort­gage. The House plan caps it at $500,000 mort­gages.

Most im­por­tant, House mem­bers are ea­ger to in­clude the Se­nate’s re­peal of the Oba­maCare penalty for not buy­ing in­sur­ance. Bravo.

Democrats, mean­while, are claim­ing that elim­i­nat­ing the penalty — in ef­fect, mak­ing Oba­maCare vol­un­tary — will spell dis­as­ter for mil­lions of peo­ple with Oba­maCare plans. That’s dem­a­goguery. Peo­ple who want to stay in Oba­maCare won’t lose their sub­sidy or their el­i­gi­bil­ity.

But abol­ish­ing the penalty will be a big tax break for the 6.7 mil­lion fil­ers cur­rently get­ting whacked for not buy­ing Oba­maCare-com­pli­ant in­sur­ance.

Re­mov­ing the penalty may cause Oba­maCare pre­mi­ums to rise slightly — the Con­gres­sional Bud­get Of­fice spec­u­lates about 10 per­cent — but most buy­ers get sub­si­dies that in­su­late them from pre­mium hikes. Those who don’t will fi­nally have the freedom to buy plans with­out Oba­maCare’s costly re­quire­ments and save a bun­dle on in­sur­ance.

As the cal­en­dar runs out, House and Se­nate Repub­li­cans will have to com­pro­mise on a dozen other dif­fer­ences be­tween their tax bills, in­clud­ing the treat­ment of med­i­cal ex­penses, in­ter­est on stu­dent loans, the al­ter­na­tive-min­i­mum tax and gains on selling stock.

There will be win­ners and losers with each de­ci­sion. But on bal­ance, Amer­i­cans will get to keep more of what they earn. And busi­nesses will be en­cour­aged to in­vest, grow and hire.

Tell the prima don­nas and fence­sit­ters in Congress who failed to re­peal Oba­maCare that it can’t hap­pen again. The na­tion needs tax cuts now.

On bal­ance, Amer­i­cans will get to keep more of what they earn. And busi­nesses will ’ be en­cour­aged to in­vest, grow and hire.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.