Trump tax re­form cuts rates, fil­ing forms

Crit­ics worry about deficits; eco­nomic aides con­fi­dent pres­i­dent will get deal

The Washington Times Daily - - FRONT PAGE - BY S.A. MILLER

The White House an­nounced the out­lines of an am­bi­tious tax re­form plan Wednesday that en­vi­sions deep cuts in the rates paid by Amer­i­can fam­i­lies and busi­nesses — and top aides warned naysay­ers against doubt­ing Pres­i­dent Trump’s abil­ity to get it done.

Mr. Trump’s eco­nomics team said the blue­print would re­duce most Amer­i­cans’ tax fil­ing to a sin­gle page, make busi­nesses more com­pet­i­tive in the in­ter­na­tional econ­omy and en­tice tril­lions of dol­lars of in­vest­ment back into the U.S.

“It’s a great plan. It’s go­ing to put peo­ple back to work,” Mr. Trump said.

The out­line won im­me­di­ate praise from the Repub­li­cans who will have to shepherd the plan through Capi­tol Hill, and from busi­ness groups that said the coun­try is long over­due for a sim­pler, more com­pet­i­tive tax code.

But Demo­cratic lead­ers and bud­get watch­dog groups said the out­line was short on details, pre­dicted the numbers wouldn’t add up and warned of everdeep­en­ing deficits as money is si­phoned away from the Trea­sury.

“If the pres­i­dent’s plan is to give a mas­sive tax break to the very wealthy in this coun­try — a plan that will mostly ben­e­fit peo­ple and busi­nesses like Pres­i­dent Trump’s — that won’t pass muster with we Democrats,” said Se­nate Mi­nor­ity Leader Charles E. Schumer, New York Demo­crat.

Mr. Trump laid out four goals for re­forms, which his aides said will shape the de­bate as Congress works to fill in the details. He wants a plan that ex­pands the econ­omy and cre­ates mil­lions of jobs, sim­pli­fies the bur­den­some tax code, pro­vides relief to Amer­i­can fam­i­lies, es­pe­cially in the mid­dle class, and es­tab­lishes one of the low­est busi­ness tax rates on the globe.

His plan would flat­ten the tax code by re­duc­ing the num­ber of tax brack­ets from seven to three. He would lower the top tax rate from 39.6 per­cent to 35 per­cent, and the other brack­ets would have rates of 25 per­cent and 10 per­cent.

The standard de­duc­tion would more than dou­ble to $24,000 for a mar­ried cou­ple, es­sen­tially cre­at­ing a 0 per­cent rate for low-in­come fam­i­lies.

Mr. Trump would elim­i­nate ev­ery tax de­duc­tion ex­cept those that are most pop­u­lar among mid­dle-class fam­i­lies: the home mort­gage in­ter­est and char­i­ta­ble giv­ing breaks.

The es­tate tax would be elim­i­nated, as would the al­ter­na­tive min­i­mum tax for high earn­ers and Oba­macare’s 3.8 per­cent tax on in­vest­ment in­come.

On the busi­ness side, the plan calls for re­duc­ing the cor­po­rate tax rate from 35 per­cent to 15 per­cent.

“This is a once-in-a-gen­er­a­tion op­por­tu­nity to do something re­ally big,” said Gary Cohn, direc­tor of the pres­i­dent’s Na­tional Eco­nomic Coun­cil, who pre­sented the plan to re­porters at the White House and ac­knowl­edged the fight ahead.

“We will be at­tacked from the left, and we will be at­tacked from the right. But one thing is cer­tain: I would never, ever bet against this pres­i­dent. He will get this done for the Amer­i­can peo­ple,” said Mr. Cohn.

The pro­posal also in­cluded a one­time op­por­tu­nity for cor­po­ra­tions to bring off­shore prof­its into the U.S. at a lower rate than the cur­rent 35 per­cent. The pro­posal did not spec­ify what the lower rate would be, but the tax break prom­ises a mas­sive surge in rev­enue.

U.S. companies hold an es­ti­mated $2.6 bil­lion off­shore to avoid high tax rates.

The plan did not in­clude the border ad­just­ment tax that House Repub­li­cans had sought as a way to re­bal­ance in­cen­tives be­tween im­ports and ex­ports and to raise the money needed to off­set the rate cuts.

Crit­ics said the huge tax cuts for in­di­vid­u­als and busi­nesses threat­ened to in­crease deficits. The 15 per­cent cor­po­rate tax rate alone, they es­ti­mated, would cost the govern­ment $2 tril­lion in lost rev­enue.

Trea­sury Sec­re­tary Steve Mnuchin said those pro­jec­tions ig­nored the eco­nomic growth that the lower rates would spur, gen­er­at­ing more rev­enue for the govern­ment — “tril­lions of dol­lars,” he said.

“Hog­wash,” replied Tax­pay­ers for Com­mon Sense, a bud­get watch­dog. “Growth is the magic pixie dust pol­i­cy­mak­ers throw in eco­nomic plans to make them ap­pear fis­cally sound when they aren’t. Be­fore you know it, poof, that pixie dust turns into a pile of deficit spend­ing that adds to the na­tion’s soar­ing debt.”

The de­bate about whether tax cuts “pay for them­selves” is likely to dom­i­nate the con­ver­sa­tion, but Democrats also are us­ing la­bels such as “im­moral” and “un­prin­ci­pled.”

“While the pres­i­dent, multi­na­tional cor­po­ra­tions and wealthy share­hold­ers en­joy a big tax cut, tril­lions of dol­lars will be added to Amer­ica’s crip­pling debt,” said Sen. Ron Wy­den of Ore­gon, the top Demo­crat on the Se­nate Fi­nance Com­mit­tee. “This kind of ir­re­spon­si­bil­ity is light on details for peo­ple who work for a liv­ing and is based off of a failed trickle-down eco­nomic the­ory and one that could de­plete Medi­care and So­cial Se­cu­rity as we know it.”

Repub­li­can lead­ers on Capi­tol Hill, who in­tend to put their mark on a tax re­form bill, called Mr. Trump’s plan “crit­i­cal guide­posts” for the leg­isla­tive process while en­dors­ing the pre­cept of lower rates for in­di­vid­u­als and busi­nesses.

“With an eye to­ward fair­ness and sim­plic­ity, we’re con­fi­dent we can rebuild our tax code in a way that will grow our econ­omy, bet­ter pro­mote sav­ings and in­vest­ment, pro­vide our job cre­ators with a com­pet­i­tive ad­van­tage, and bring pros­per­ity to all Amer­i­cans,” Repub­li­can lead­ers said a joint state­ment.

The state­ment was is­sued by House Speaker Paul D. Ryan of Wis­con­sin, Se­nate Ma­jor­ity Leader Mitch Mc­Connell of Ken­tucky, House Ways and Means Com­mit­tee Chair­man Kevin Brady of Texas and Se­nate Fi­nance Com­mit­tee Chair­man Or­rin G. Hatch of Utah.

Rep. Tom Cole, Ok­la­homa Repub­li­can, said com­mu­ni­ca­tion be­tween the White House and Congress is “good and get­ting bet­ter.”

“And look, he’s the pres­i­dent of the United States — he has ev­ery right to make any [pro­posal] he cares to make,” he said.

Mr. Cole said he didn’t nec­es­sar­ily view House Repub­li­cans’ pro­posed border ad­just­ment tax on im­ports as “dead.”

“But clearly, if you don’t pro­ceed un­der rec­on­cil­i­a­tion, you don’t have to have it,” he said. “And I’m not say­ing that’s a good thing [be­cause] I’m very wor­ried about blow­ing huge holes in the deficit, but this does pro­vide more flex­i­bil­ity.”

The plan quickly gained plau­dits from busi­ness groups.

“Pres­i­dent Trump has lis­tened to those who feel they work harder to­day for less or are out of a job,” said Jay Tim­mons, pres­i­dent and CEO of the Na­tional As­so­ci­a­tion of Man­u­fac­tur­ers. “The pres­i­dent de­liv­ered on his com­mit­ment to put the force of the White House be­hind poli­cies that will grow the man­u­fac­tur­ing econ­omy in the United States and raise stan­dards of liv­ing for ev­ery­one in our coun­try.”

Matthew Shay, pres­i­dent and CEO of the Na­tional Re­tail Fed­er­a­tion, com­mended Mr. Trump’s “lead­er­ship on much-needed com­pre­hen­sive tax re­form.”

“What mat­ters most is that we en­act pro-growth tax pol­icy for both in­di­vid­u­als and busi­nesses. This puts money back in the pock­ets of hard­work­ing Amer­i­cans, help­ing to grow busi­nesses and in­dus­tries in the com­mu­ni­ties where con­sumers live and work,” he said.

AS­SO­CI­ATED PRESS

SALES PITCH: Pres­i­dent Trump said his out­line for am­bi­tious tax re­form an­nounced Wednesday is “a great plan. It’s go­ing to put peo­ple back to work.”

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