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.

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