Pres­i­dent Trump’s tax re­form

It’s ‘a unique op­por­tu­nity to do something ma­jor’ about a sys­tem no­body likes

The Washington Times Daily - - EDITORIAL -

Pres­i­dent Trump pre­sented his ea­gerly an­tic­i­pated tax-re­form scheme Wednesday and the re­views were, as ex­pected, mixed but hope­ful. “Clearly we have a unique op­por­tu­nity to do something ma­jor here,” said Gary Cohn, direc­tor of the pres­i­dent’s Na­tional Eco­nomic Coun­cil. “It’s our in­ten­tion to cre­ate a huge tax cut and equally as important, a huge sim­pli­fi­ca­tion of the tax sys­tem in Amer­ica.”

The pres­i­dent would slash tax rates on busi­nesses and make ma­jor changes to rates for in­di­vid­u­als, some of them sure to raise the usual howls and squeals, but the re­sult would be real re­form of a tax sys­tem that Jimmy Carter fa­mously called “a dis­grace to the hu­man race.” (Dogs and cats didn’t like it, either.)

The re­forms largely re­flect the cam­paign prom­ises Mr. Trump made, to wide ap­plause, in his cam­paign for pres­i­dent. But there are stark dif­fer­ences. One change likely to pro­voke ob­jec­tions would re­peal pro­vi­sions en­abling in­di­vid­ual tax­pay­ers to deduct state and lo­cal taxes from re­portable in­come on which they pay fed­eral in­come tax. This would par­tic­u­larly hurt tax­pay­ers in high-tax states like New York, Cal­i­for­nia and New Jersey.

The Trump pro­posal would im­pose a top tax rate of 35 per­cent on in­di­vid­u­als, down from 39.6 per­cent at present but more than the 33 per­cent he pro­posed on the stump. A standard de­duc­tion for ev­ery­one would be dou­bled, but de­duc­tions ex­cept for mort­gage in­ter­est and char­i­ta­ble con­tri­bu­tions, in­clud­ing those to re­li­gious in­sti­tu­tions, would be elim­i­nated.

Pres­i­dent Trump and many econ­o­mists ar­gue that tax cuts will make the econ­omy, slug­gish over the past eight years, blos­som and grow, re­strain deficits and re­store public con­fi­dence in the govern­ment.

“We’ve been hear­ing from the [Obama] ad­min­is­tra­tion that 3 per­cent growth is hard to get to, and they couldn’t get there,” says Steven Mnuchin, the sec­re­tary of the Trea­sury, “and that’s why we got this new pres­i­dent. If there had been a 3 per­cent growth maybe there would have been a dif­fer­ent out­come.”

But the pres­i­dent’s tax-cut pro­posal, like his pro­posed bud­get, is just that, a pro­posal. Pres­i­dents pro­pose and Congress can, and usu­ally does, dis­pose. Repub­li­cans gen­er­ally praised the pres­i­dent’s pro­posal in the hours lead­ing up to the pres­i­dent’s an­nounce­ment as details be­gan to emerge from the White House. But many con­gress­men in the Grand Old Party are split on the size of the tax cuts in the Grand Old Pro­posal, and which tax breaks, par­tic­u­larly for busi­ness, should stay or go away.

Un­less Mitch Mc­Connell, the leader of the Repub­li­cans in the Se­nate, and Speaker Paul Ryan in the House can keep their troops in line for what­ever fi­nal re­form emerges — and that’s al­ways a big Repub­li­can “if” — the White House will need Demo­cratic votes.

Sen. Charles Schumer, the leader of the Demo­cratic mi­nor­ity in the Se­nate, chimed in with the ex­pected dis­cor­dant note from his place in the shade of the no-no tree, re­flect­ing the Demo­cratic view that Mr. Trump’s pro­pos­als are tilted heav­ily in fa­vor of the pros­per­ous.

Rep. Kevin Brady of Texas, the Repub­li­can chair­man of the House Ways and Means Com­mit­tee that will send the fi­nal pro­posal to Congress, sounded a more pos­i­tive note. “It re­ally makes clear the pres­i­dent’s com­mit­ment to tax re­form and de­liv­er­ing it in a very bold way this year,” he says. “We’ve still got some work to do. There’s no ques­tion about it.”

But tax re­form is fi­nally on the ta­ble, and that’s a start.

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