Huge tax cuts, few details
GOP proposal vague on deficit, which deductions will be axed
WASHINGTON — Republican leaders on Wednesday proposed slashing tax rates for the wealthy, the middle class and businesses while preserving popular tax deductions that encourage buying homes and giving to charity, hoping to unify the party behind a proposal to revamp the U.S. tax code.
But the nine-page framework they released to kick off negotiations left many key questions unanswered, including how they plan to avoid adding trillions of dollars to the government’s debt. The framework leaned heavily on limiting taxes paid by the wealthiest Americans, such as the alternative-minimum tax, and opposition to these changes from Democrats suggest it will be a battleground as negotiations intensify.
Republicans were also careful not to identify numerous tax breaks they might remove, focusing instead on promises to lower rates so much that President Donald Trump estimated the effort would amount to the biggest tax cut of all time.
The “unified framework” was meant to serve as a starting point for negotiations on a tax deal, which lawmakers hope to complete by the end of the year. Republican leaders are now tasked with resolving controversial questions to unite their party — and possibly some Democrats — behind tax legislation, such as what corporate tax breaks to protect and how much revenue they are willing to lose in pursuit of new economic growth.
Trump has made rewriting the tax code a major part of his domestic agenda, and Wednesday he urged his party on.
“This is a once-in-a-generation opportunity, and I guess it’s probably something you could say I’m very good at,” Trump said in Indiana. “I’ve been waiting for this for a long time.”
The Committee for a Responsible Federal Budget estimated that the nine-page framework would equate to a $2.2 trillion tax cut, with $5.8 trillion lost to lower rates and other changes, and another $3.6 trillion recouped by eliminating deductions.
There were few initial estimates of what the tax framework might mean for economic growth, an area that will probably divide Republicans supportive of the plan and Democrats who immediately complained that the changes would disproportionately benefit the wealthy.
The White House and GOP leaders negotiated for months and agreed in large part only on the taxes they want to cut. They now face the more arduous task of agreeing on which tax deductions to take away, a process sure to pit party members against each other and put them under extreme pressure from outside lobbying groups fighting to protect their favored tax breaks.
“I hope that people will have the intestinal fortitude it’s going to take to do it right,” Sen. Bob Corker, R-Tenn., said late Tuesday. “People say the health care was hard — you have no idea. You have no idea how this is going to be.”
In Indiana, Trump threatened to try to oust Democrats who don’t vote to turn the tax cuts into law. He singled out Indiana Sen. Joe Donnelly who is up for re-election next year, as a Democrat who would be targeted if he didn’t sign on to the GOP plan.
“We will come here, we will campaign against him like you wouldn’t believe,” Trump said.
Democratic leaders will try to keep their party united in opposition, and Wednesday they charged the GOP with proposing a huge tax cut to the wealthy but offering little for anyone else.
They said there was little evidence the tax plan provided any tax relief for low-income Americans, and it couldn’t be learned how much the middle class would benefit, either. Republicans didn’t specify what tax rates would apply to certain income levels, making it also hard to determine the framework’s impact.
“Republicans’ tax framework is not tax reform,” said House Minority Leader Nancy Pelosi, D-Calif. “It is a framework that gives away the store to the wealthiest while sticking the middle class with the bill.”
Without Democratic support, Republicans would need near-universal backing from their own party to move a tax bill through Congress, especially in the Senate, where they hold a slim majority.