Northwest Arkansas Democrat-Gazette
Trump rolls out tax proposal
He declares middle class will win big
INDIANAPOLIS — President Donald Trump on Wednesday began a push to overhaul the federal tax code, proposing an array of cuts for individuals and businesses that would constitute the most sweeping changes to the system in decades.
Trump, shifting legislative priorities after the latest defeat of his efforts to dismantle the Patient Protection and Affordable Care Act, cast his tax plan as an economic imperative and the fulfillment of a promise to his coalition of working-class supporters to deliver benefits in the form of lower taxes, better jobs and higher wages. He did not, however, offer any measure of the plan’s cost.
“This is a revolutionary change, and the biggest winners will be middle-class workers as jobs start pouring into our country, as companies start competing for American labor and as wages continue to grow,” Trump told hundreds of
supporters in the farm bureau building at the Indiana Fairgrounds.
After divisions among Republicans derailed efforts to scrap the 2010 health care law, Trump made an explicit bid for Democrats to support the tax plan, which has substantial rewards for wealthy people and corporations, including the elimination of taxes on large inheritances and deep reductions in the rates paid by businesses large and small.
“Democrats and Republicans in Congress should come together, finally, to deliver this giant win for the American people,” Trump said.
But behind the scenes, Republican congressional leaders and senior White House officials have discussed bypassing Democrats and using special budget rules that would allow them to get the bill through Congress on a simple majority vote.
Many Democrats came out in opposition to the plan.
“Each of these proposals would result in a massive windfall for the wealthiest Americans and provide almost no relief to middle-class taxpayers who need it most,” Senate Minority Leader Charles Schumer, D-N.Y., said at the Capitol.
“If this framework is all about the middle class, then Trump Tower is middle-class housing,” said Sen. Ron Wyden, D-Ore. “It violates Trump’s tax pledge that the rich would not gain at all under his plan by offering sweetheart deals for powerful CEOs, giveaways for campaign coffers and a new way to cheat taxes for Mar-aLago’s loyal members.”
Mar-a-Lago is Trump’s Palm Beach, Fla., golf resort.
Trump landed in Indiana aboard Air Force One with Sen. Joe Donnelly of Indiana, who many consider to be one of the most endangered Senate Democrats facing re-election in 2018. Donnelly has expressed openness to the tax overhaul, citing the need for it to reward companies that keep jobs in the U.S. Still, Trump issued a warning to Donnelly from the stage.
“If Sen. Donnelly doesn’t approve it — because you know he’s on the other side — we will come here and we will campaign against him like you wouldn’t believe,” Trump said. He predicted that “numerous Democrats” would cross the aisle to support the plan anyway because “it’s the right thing to do.”
The president has made similar overtures to Democratic Sens. Claire McCaskill of Missouri and Heidi Heitkamp of North Dakota in recent weeks. All three face re-election in 2018.
The White House is fully aligned with the tax-writing committees in the House and Senate, senior administration officials said, after months of private talks aimed at gaining consensus on the issue.
“This is a now-or-never moment,” said House Speaker Paul Ryan, R-Wis., who built his reputation on tax and budget issues.
Likewise, Trump said in Indianapolis, “This is a once-in-a-generation opportunity.”
While Republican leaders say they are united on the plan, they must now sell it to lawmakers who have been deeply divided this year. The push began at a House Republican retreat Wednesday at Fort McNair in Washington, where Rep. Kevin Brady,
R-Texas, the chairman of the Ways and Means Committee, walked members through the blueprint and talked about the importance of uniting to fix the tax code.
Later, in a hopeful sign for Republican leaders fretting privately about keeping their rank and file together, the conservative House Freedom Caucus, whose members have derailed the party’s initiatives with hard-line demands, issued a statement of support for the plan, calling it “forward looking” and pledging to back the party’s budget designed to ensure its passage.
PROPOSAL’S DETAILS
After months of private talks, the so-called Big Six working group came out with its proposal to deeply reduce levies for corporations, simplify everyone’s brackets and nearly double the standard deduction used by most Americans.
On the individual side, the plan would reduce the tax brackets from seven to three, with tax rates of 12 percent, 25 percent and 35 percent, administration officials said. The current top rate is 39.6 percent, and the lowest rate is 10 percent.
The framework also gives Congress the option of creating a higher, fourth, rate above 35 percent to ensure that top earners are paying their fair share. But it does not specify what income levels would be associated with the higher rate, what that new rate might be or explicitly direct Congress to implement a fourth bracket.
The plan aims to simplify and cut taxes for the middle class by doubling the standard deduction to $12,000 for individuals and to $24,000 for married couples. That would allow people to avoid a complicated process of itemizing their taxes to claim various credits and deductions. It would also increase the child tax credit from $1,000 to an unspecified amount and create a new $500 tax credit for dependents who are not children, such as the elderly.
Provisions such as the alternative minimum tax and the estate tax, a tax on inherited wealth that Trump has derided over the years, would be gone under the Republican proposal. Most itemized deductions, including those widely used for state and local tax expenses, would also be eliminated. However, the plan would preserve the deductions for mortgage interest expenses and charitable giving and keep incentives for education and retirement savings plans.
The proposal also calls for big changes to taxation for companies. The proposal aims to reduce the corporate tax rate to 20 percent from 35 percent, a shift that is intended to make U.S. companies more competitive with their counterparts around the world.
Wal-Mart said in a statement that the proposal is “an important step in the right direction on tax reform,” adding that the plan “recognizes the need to advance tax reform options that encourage investment in the United States, make U.S. businesses more competitive around the world, and help working families.”
Information for this article was contributed by Julie Hirschfeld Davis and Alan Rappeport of The New York Times; by Marcy Gordon, Ken Thomas and Andrew Taylor of The Associated Press; by Damian Paletta, Mike DeBonis and Carolyn Y. Johnson of The Washington Post; and by Sahil Kapur of Bloomberg News.