Trump demands tax reform that won’t help rich
Clashes with GOP plan
With President Trump demanding quick action on tax reform, Republican leaders on Capitol Hill said Wednesday that they will release a full framework by month’s end and hope to set an aggressive schedule that would put a massive package on Mr. Trump’s desk by year’s end.
But Mr. Trump may have complicated those efforts when he said in a meeting with lawmakers that he doesn’t want the wealthy to get a bigger share of the benefits from whatever Congress passes.
“The rich will not be gaining at all with this plan,” the president said at a White House meeting with Democrats and Republicans. “If they have to go higher, they’ll go higher, frankly. We’re looking at the middle class, and we’re looking at jobs.”
Following through on that vow, however, could be tricky for Republicans who have promised to lower rates across the board but also need to make small business owners who file as individual
taxpayers competitive with the corporate tax rate. Mr. Trump said he wants a corporate rate of 15 percent.
How Congress handles those competing demands will be a big test for the blueprint that House Speaker Paul D. Ryan, Wisconsin Republican, and Ways and Means Committee Chairman Kevin Brady, Texas Republican, have promised to deliver the week of Sept. 25.
“The whole point is an aggressive timeline to make sure that we get tax reform done this year,” Mr. Ryan said at an event sponsored by The Associated Press.
Mr. Trump urged lawmakers to move quickly and pushed for bipartisan action in his White House meeting Wednesday.
“Some of the greatest legislation ever passed, it was done in a bipartisan manner,” the president said. “And so that is what we are going to give a shot.”
Republicans on Capitol Hill say they are willing to work with Democrats. So far, however, they have charted a partisan course and worked among themselves on principles.
Asked Tuesday why they haven’t reached out to key Democrats, Marc Short, the White House’s top liaison to Capitol Hill, said Democrats will have a chance to play a role when bills are debated in committee.
Democratic leaders said they are skeptical that Republicans can earn their votes.
“We will not go along with a tax scheme to lavish the wealthy with lower rates or even more carve-outs or a plan that explodes the debt and the deficit,” said Senate Minority Leader Charles E. Schumer, New York Democrat.
Sen. Ron Wyden of Oregon, the top Democrat on the Senate Finance Committee, also scoffed at Mr. Trump’s comment that the wealthy wouldn’t gain under the plan.
“Right, and next year I’m playing in the NBA,” Mr. Wyden said on Twitter.
A tax reform working group that includes Mr. Ryan and Mr. Brady released a general statement of principles in July calling for lower rates and a simpler code, but few details have emerged. The group also includes Senate Majority Leader Mitch McConnell, Kentucky Republican; Senate Finance Committee Chairman Orrin G. Hatch, Utah Republican; Treasury Secretary Steven T. Mnuchin; and White House economic adviser Gary Cohn.
Despite some optimism on the new time frame, lawmakers blew through timelines for action on tax reform as Republicans labored for months on Obamacare repeal efforts.
Rep. Peter J. Roskam, an Illinois Republican who chairs a Ways and Means tax subcommittee, said the blueprint to come this month will energize the conversation.
“Once there’s a general agreement about what these parameters are, what rates are, how international is handled and some of these other things, then it’s the committee’s responsibility to write to those parameters,” he said.
One major sticking point is a 2018 budget resolution, which Republicans need to pass in order to unlock a fast-track budget tool that would allow them to bypass a potential filibuster in the Senate.
Some conservatives, citing Republicans’ failed plans to leverage the 2017 budget into a repeal of Obamacare, say they want to see the tax plan before they commit to voting for the 2018 budget.
Lawmakers said they also will need more details on how the package is funded.
Under the fast-track reconciliation process Republicans plan to use, they either need to pass tax reform that doesn’t add to the federal deficit in the long run or opt for temporary changes.
Mr. Ryan and Mr. Brady have long said a revenue-neutral package is the goal because individuals and businesses need the certainty that comes with permanent changes to the code.
But Mr. Ryan wouldn’t commit to that on Wednesday. He said the key for tax reform is to get the economy growing, increase jobs, cut the tax burden for the middle class and promote American businesses.
“That is more important than anything else, because if we have tax reform that doesn’t actually fix our problems, then we’ll lose more and more businesses and the deficit will go even higher,” he said.
Conservatives have long argued that congressional scorekeepers shortchange the benefits of tax cuts by underestimating the economic growth they spur.
“We should not be revenueneutral,” Sen. Ted Cruz of Texas said Wednesday at an event hosted by the Tax Foundation, where he laid out his principles for a plan that emphasizes growth, simplicity and fairness.
“Will we step up and seize this opportunity?” Mr. Cruz said. “Or will it be one of the greatest missed opportunities in modern history?”
Mr. Trump on Wednesday again said he wants to lower the corporate tax rate from the current 35 percent to 15 percent.
His budget director said that is achievable, but the Treasury secretary said this week that it could be a tough target to hit.
Mr. Short said this week that they are shooting for 15 percent but may have to negotiate a higher rate as part of a compromise.
Emerging from a House Republican meeting Wednesday, Rep. Mark Meadows of North Carolina, who chairs the conservative House Freedom Caucus, said a 20 percent rate is more likely.
“I think their goal is to get to 20 percent corporate. We learned that. That’s new. That’s good,” Mr. Meadows said.
Lawmakers are also looking at a rate of around 25 percent for pass-through companies, whose owners file their taxes as individuals, he said.
Mr. Brady said after the meeting that the plan is to provide unprecedented expensing, which is the same language used in a joint statement of principles he and other leaders signed onto this summer.
A day earlier, Mr. Short had said expensing was not as important to Mr. Trump as lowering rates.