President Donald Trump pushes his proposal for tax cuts while talking to Rep. Kevin Brady, R-Texas.
Proposal to slash corporate and individual rates is expected today
President Trump plans to unveil a plan Wednesday to dramatically slash the corporate tax rate and collapse individual income tax brackets — and he’ll try to sell it by applying a hard lesson from the failing effort to repeal Obamacare: Enlist a few Democrats.
In a speech in Indianapolis, Trump will make his opening appeal to Americans for a plan that would lower the corporate rate to 20% and collapse individual tax brackets from seven to three: 15%, 25% and 35%, according to a lobbyist who has seen the plan and requested anonymity. In a dinner Monday night with grass-roots supporters, the president did not specify the income thresholds for those rates. Another source who has been briefed on the still-evolving plan said the lowest rate could be 12% to 15%. The lowest tax rate now is 10%; the highest is 39.6%.
Trump said he has asked his staff to confirm that the plan would represent “the biggest tax cut in American history” by comparing the rates to the plan passed under President Reagan in 1986, a dinner attendee said.
Though Trump wants to cut individual rates in most brackets, he said he is convinced that the best way to drive the U.S. gross domestic product to 4% or 5% growth is by lowering corporate rates, and he repeatedly mentioned to his dinner guests the competitive disadvantage of U.S. companies vs. countries such as India, the attendee said.
“We’re the highest-taxed nation in the developed world, and we want to become one of the lowest,” Trump said Tuesday before meeting with bipartisan members of the House tax-writing committee. “The jobs will start pouring in from all over the world coming back to our country.”
Trump will make the announcement alongside Indiana Sen. Joe Donnelly, a Democrat planning to travel with the president, and in tandem with the plan’s release by Republican negotiators on Capitol Hill. Donnelly is considered one of the most endangered Democratic senators up for re-election in 2018; he will make the trip unless he is needed in Washington for Senate votes.
Because the congressional push to repeal Obamacare collapsed Tuesday, Trump is hoping to champion an across-the-board tax cut as his final and perhaps best chance to accomplish a major legislative achievement by the end of the calendar year — and before next year’s midterm election season sets in.
Trump told dinner attendees that he thought a previous event in North Dakota, where he was accompanied by that state’s Democratic senator, Heidi Heitkamp, was a success and that he wants to model future events on it. Yet one Democrat who attended Tuesday’s meeting with Trump said Democrats haven’t been consulted on a plan they say will favor the wealthy and force cuts to Medicare and Social Security.
“Trump asked for Democrats to jump on the caboose after the tax train has already left the station. I saw no Democrat ready to jump on board,” Rep. Lloyd Doggett, the top Democrat on the tax committee, said in a statement. “Claiming that tax breaks will magically pay for themselves is like claiming Mexico will pay for his wall.”
The second major plank of the White House strategy is to feature small-business owners like John Gannon, owner of a custom wood fencing company in Indianapolis. Gannon is among the people the White House is planning to highlight in Trump’s speech on Wednesday, according to details shared with USA TODAY.
“The outreach is far more significant in advance this time. Secondly, there’s more receptivity to doing this in a bipartisan manner,” said Marc Short, White House legislative affairs director.
The White House also wants to focus on people like Indiana’s Kip Tom, a seventh-generation farmer. In selecting Tom’s story to highlight, it’s also clear the president will push for a repeal of the estate tax, which Republicans have been pushing for years.
Republican lawmakers are working to clear one of the big obstacles necessary for tax changes — adopting a budget that makes room for the tax cuts — with a tentative deal between top budget committee Republicans.
Unlike the debate over repealing Obamacare, outside groups allied with the White House are united and well-organized for the tax fight. For months, conservative groups including Americans for Prosperity and the Job Creators Network have been meeting with White House officials and holding town halls, a bus tour and other events across the country.
Outside advisers say Trump, as a lifelong business executive intimately familiar with the tax code, is far more engaged in discussing the specifics of tax reform than he was in the health care debate.
The White House will sell the plan as a middle-class cut by emphasizing the proposed end to preferences and deductions — including the state and local writeoff that allows taxpayers who itemize on their federal returns to deduct state and local real estate and personal property taxes. Short has said the plan won’t touch the politically popular home mortgage interest and charitable giving deductions.
“Trump asked for Democrats to jump on the caboose after the tax train has already left the station. I saw no Democrat ready to jump on board.”
Rep. Lloyd Doggett, D-Texas