Bud­get writ­ers plan $1.5 tril­lion in tax cuts

The Washington Times Weekly - - Politics - BY DAVID SHERFINSKI

Repub­li­can sen­a­tors struck a deal this week paving the way for po­ten­tially $1.5 tril­lion in tax cuts over the next decade, sug­gest­ing broad out­lines of a plan to be pre­sented next week.

Sens. Bob Corker, Ten­nessee Repub­li­can, and Pa­trick J. Toomey, Penn­syl­va­nia Repub­li­can, said their agree­ment on a 2018 blue­print will give law­mak­ers enough room to craft a tax pack­age that low­ers rates and flat­tens the code.

The plan could deepen the deficit in the short run, but the two bud­get writ­ers hope it im­proves fi­nances over time.

Mr. Corker’s back­ing was con­sid­ered crit­i­cal to writ­ing a 2018 bud­get that would al­low for de­bate on tax cuts with­out a Demo­crat-led fil­i­buster in the Se­nate.

It also sig­nals the kind of sen­a­tor-by­se­n­a­tor ne­go­ti­a­tions Repub­li­can lead­ers are en­gaged in as they rush to meet a self­im­posed end-of-year dead­line.

Mr. Corker and Mr. Toomey didn’t spec­ify a dol­lar num­ber for the tax cut in their agree­ment, but Sen. Ron John­son, Wis­con­sin Repub­li­can and an­other bud­get com­mit­tee mem­ber, said party lead­ers are look­ing at a 10-year pack­age that could re­sult in a to­tal $1.5 tril­lion rev­enue loss.

Mr. Corker said he hopes the fi­nal pack­age looks bet­ter.

“Ul­ti­mately, my sup­port will be con­tin­gent on a fi­nal pack­age that gen­er­ates sig­nif­i­cant eco­nomic growth and does not worsen but hope­fully im­proves our fis­cal sit­u­a­tion,” he said.

Repub­li­can lead­ers have promised to re­lease the out­lines of their plans next week, paving the way for the tax com­mit­tees in the House and Se­nate to be­gin hash­ing out de­tails and for the bud­get com­mit­tees to pass a 2018 spend­ing plan that would un­lock fast-track pro­ce­dures, known as rec­on­cil­i­a­tion, that they could use to avoid a fil­i­buster.

With a one-vote Repub­li­can ma­jor­ity on the Se­nate Bud­get Com­mit­tee, the agree­ment be­tween Mr. Corker, a deficit hawk, and Mr. Toomey, who ad­vo­cates even deeper tax cuts, was a cru­cial first step to­ward a blue­print.

Repub­li­cans com­pli­cated their sched­ule, how­ever, by an­nounc­ing a Se­nate vote on re­peal­ing Oba­macare next week — smack in the mid­dle of what they ex­pected to be a chance to tout tax re­forms.

“Ev­ery­thing gets in the way of tax re­form, and we are go­ing to have to be pre­pared to bull­doze through them,” Sen. Or­rin G. Hatch, Utah Repub­li­can and chair­man of the tax-writ­ing Se­nate Fi­nance Com­mit­tee, told Bloomberg News.

Mr. Hatch is part of a work­ing group that has been craft­ing broad prin­ci­ples for a tax pack­age for months, and con­gres­sional lead­ers are plan­ning to re­veal more de­tails next week. House Repub­li­cans are plan­ning a half-day re­treat Wed­nes­day on tax pol­icy.

The work­ing group also in­cludes House Speaker Paul D. Ryan, Wis­con­sin Repub­li­can; Se­nate Ma­jor­ity Leader Mitch McCon­nell, Ken­tucky Repub­li­can; House Ways and Means Com­mit­tee Chair­man Kevin Brady, Texas Repub­li­can; Trea­sury Sec­re­tary Steven T. Mnuchin; and White House eco­nomic ad­viser Gary Cohn.

Marc Short, the White House’s top li­ai­son to Capi­tol Hill, said Thurs­day that Repub­li­cans have been reach­ing out to many Democrats on tax re­form but are pre­pared to go it alone if nec­es­sary.

“Our aim is to make this bi­par­ti­san. We think it will make this a bet­ter bill. We think it’s bet­ter for our coun­try to in­clude their ideas, but at the end of the day, what’s most im­por­tant is we de­liver tax re­lief for the Amer­i­can peo­ple,” Mr. Short said on Fox News.

Democrats have in­di­cated that they are un­likely to sup­port a deficit-fi­nanced pack­age geared to­ward cut­ting taxes for the wealthy, and out­side groups said this week that it would be ir­re­spon­si­ble to add $1.5 tril­lion to the na­tional debt with­out a clear plan to pay for it.

“It’s time to stop pre­tend­ing that tax cuts for the wealthy some­how pay for them­selves,” said Rep. Scott H. Peters, Cal­i­for­nia Demo­crat. “Tax re­form needs to be paid for.”

If Repub­li­cans end up with a to­tal tax cut near $1.5 tril­lion, then the pack­age could be much less am­bi­tious than the White House and con­gres­sional lead­ers en­vi­sion and leave in­come tax rates higher than they would like.

A 1 per­cent­age point in­crease or de­crease in the cor­po­rate tax rate trans­lates to roughly $100 bil­lion in rev­enue over 10 years, ac­cord­ing to the Joint Com­mit­tee on Tax­a­tion, a non­par­ti­san panel that tra­di­tion­ally scores tax-re­lated leg­is­la­tion for Congress.

That means a $1.5 tril­lion cut likely wouldn’t cover Pres­i­dent Trump’s pro­posed 15 per­cent cor­po­rate tax rate — a 20-point re­duc­tion from the cur­rent 35 per­cent rate — and would barely cover the 20 per­cent rate House Repub­li­cans pro­posed last year. That doesn’t even touch the in­di­vid­ual in­come tax rates that Repub­li­cans also want to tackle.

“[The cor­po­rate tax rate is] go­ing to be right in that range, I think — 20, low 20s,” Rep. Erik Paulsen, Min­nesota Repub­li­can and a mem­ber of the House Ways and Means Com­mit­tee, said Thurs­day on Fox Busi­ness Network.

Repub­li­cans have said they will elim­i­nate ex­ist­ing tax breaks and use the ad­di­tional rev­enue to lower rates.

Mr. Ryan and Mr. Brady have long said the goal is to pass a rev­enue-neu­tral pack­age this year and that busi­nesses and in­di­vid­u­als need the cer­tainty that comes with per­ma­nent changes to the tax code.

Un­der bud­get rules, any deal that deep­ens deficits must ex­pire af­ter 10 years. That was the case with the Bush-era tax cuts, which were set to ex­pire in 2010 and cre­ated the “fis­cal cliff” in 2012.

The House Bud­get Com­mit­tee has writ­ten a 2018 bud­get that calls for a com­pre­hen­sive tax re­form that does not in­crease the fed­eral deficit.

Mr. Ryan has said it is more im­por­tant to pass a pro-growth pack­age, but Mr. Paulsen said Thurs­day that law­mak­ers are still look­ing at plans that would bal­ance over time.

“In the House, we’re work­ing on rev­enu­eneu­tral plans, so we’re look­ing at mid­dle­class tax cuts, we’re look­ing at con­sol­i­da­tion of rates across the board that’ll help small busi­ness, which is the en­gine of our econ­omy, of course, grow new jobs,” he said.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.