Brady wraps up tax rewrite
Trump to unveil plan’s details at Wednesday event
WASHINGTON — Texas Republican Kevin Brady and a cadre of congressional tax writers working behind closed doors Monday put the finishing touches on an ambitious tax overhaul being billed as the biggest rewrite of the U.S. tax code since President Ronald Reagan was in office.
“This is an exciting week for people across the country who have waited for more than 30 years for Washington to fix the broken U.S. tax code,” said Brady, of The Woodlands.
The tax plan came together as the House failed to pass legislation containing temporary tax benefits for hurricane victims from Texas to the U.S. Virgin Islands that needed a twothirds majority. The vote, part of a larger airports bill, was 245-171.
But details of the tax overhaul remained under wraps Monday, pending a scheduled speech Wednesday by President Donald Trump to rally support for a long-simmering GOP agenda of deep business and individual tax cuts.
White House spokeswoman Sarah Huckabee Sanders said the president will lay out the details at his speech in Indiana.
“These details will include specific proposed rates for individuals, small businesses, and corporations, and he will also discuss the elimination of loopholes that have rigged the current tax code in favor of the wealthy and wellconnected,” she said.
The speech is scheduled
the same day the Senate is set to vote on the latest GOP effort to repeal the Affordable Care Act, or Obamacare, allowing Trump to pivot quickly to tax reform in the event the health care vote should fail.
The tax effort, meanwhile, has been sharply criticized by Democrats who say the proposed tax cuts will benefit the wealthy and large corporations at the expense of health and social benefits for the lower and middle classes.
“Like the health care repeal fiasco, Republicans appear intent on pushing through a partisan tax break for those at the top,” said Texas U.S. Rep. Lloyd Doggett, a top Democrat on the Ways and Means Committee.
Brady, who chairs the committee, held a retreat over the weekend ahead of the expected rollout. Committee Democrats were not invited.
Though much of the debate has focused on tax cuts, Brady has concentrated much of his attention on simplifying the tax code by eliminating what he calls “special interest” deductions and credits — possibly putting into play or limiting popular write-offs for mortgage interest and state and local taxes.
Deduction may be lost
Texans, who pay no state income taxes, save an estimated $1.2 billion a year claiming the sales tax deduction on their federal returns. That would likely go away, but Brady says lower federal tax rates would more than make up for it.
But the outline being released this week is expected to focus mainly on tax rates, leaving out many other policy decisions, such as whether to offset revenues lost from tax cuts.
“A framework,” Brady said, “is just that.”
Republicans have been divided on how to pay for tax cuts and not add to the national debt over the next decade. Prominent conservatives like Texas U.S. Sen. Ted Cruz argue that the promised economic benefits of tax cuts will pay for themselves, a proposition many Democrats find dubious.
The sticky issue of making tax cuts “revenue neutral” is likely to remain a significant stumbling block as Republican leaders try to pass a comprehensive tax reform plan by the end of the year.
Brady said his goal is “permanency,” which might mean balancing the budget over the next decade.
“From the get-go, we know that tax reform done right creates economic growth,” Brady said. “That should be accurately measured and be part of our discussion. We also know that our budget in Washington has been nonsensical for too long.”
That task was made more difficult for Brady, one of the “Big Six” on tax reform, as he was recently forced to abandon a 20 percent import tax as a way to raise new revenues to for pay tax cuts.
The import tax proposal, known as a “border adjustment tax,” divided Republicans and the business community over much of the summer, leading to its demise.
Cut in tax rates
Conservatives also have split on a proposal for more generous and rapid business expensing rules, which could help some businesses at the expense of deeper tax cuts for others.
According to leaked reports of the latest Republican blueprint, the plan is to cut the top individual tax rate to 35 percent from 39.6 percent and the top corporate tax rate to 20 percent from 35 percent.
Trump has called for dropping the top corporate rate even lower, to 15 percent, though it appears the White House might go along with a more modest cut.
Trump also has made vague suggestions about focusing tax cuts on the middle class and forgoing tax cuts for some of the wealthiest taxpayers in the nation. Those remarks have called into question whether there is any agreement among GOP negotiators about the highest individual rate.
Trump had a private dinner Monday with a group of outside conservative leaders, with tax reform reportedly on the agenda.
Brady, for his part, said he will continue pressing for “the lowest rate possible.”