The White House

Law­mak­ers say they are puz­zled by lack of de­tails on pro­posed changes

The Washington Post - - FRONT PAGE - BY KELSEY SNELL, DAMIAN PALETTA AND MIKE DEBO­NIS kelsey.snell@wash­post.com damian.paletta@wash­post.com mike.debo­nis@wash­post.com

and GOP lead­ers plan to re­veal in two weeks new de­tails of their goal of cut­ting cor­po­rate and in­di­vid­ual taxes. And in a new study, re­searchers said the low­est cor­po­rate tax rates could drop would be 26 per­cent.

The White House and GOP lead­ers plan to re­veal new de­tails of their goal of cut­ting cor­po­rate and in­di­vid­ual taxes the week of Sept. 25, and they are im­plor­ing law­mak­ers to reach a bud­get agree­ment that could smooth its pas­sage.

House Ways and Means Com­mit­tee Chair­man Kevin Brady (R-Tex.) told other House Repub­li­cans dur­ing a closed-door meet­ing Wed­nes­day that they needed to unify or the ef­fort to cut taxes could fail, ac­cord­ing to two peo­ple in the room. The an­nounce­ment is part of a GOP lead­er­ship ef­fort to cre­ate mo­men­tum and ex­cite­ment for an even­tual tax over­haul and as­suage skep­ti­cal con­ser­va­tives who have grown frus­trated that de­tails of the plan re­main closely guarded by lead­ers.

Brady told his col­leagues that “the stakes are higher than ever that we de­liver this year.” But mem­bers emerged from the meet­ing say­ing they had lit­tle idea what spe­cific tax changes lead­ers would be ask­ing them to sup­port.

“I don’t have any de­tails,” said House Free­dom Cau­cus Chair­man Mark Mead­ows (R-N.C.). “I don’t un­der­stand why there are no de­tails, es­pe­cially since our lead­er­ship said we would have de­tails on tax re­form months ago.”

Ear­lier in the morn­ing, House Speaker Paul D. Ryan (R-Wis.) left open the pos­si­bil­ity that the tax plan would cut govern­ment rev­enue — adding to the govern­ment’s bud­get deficit but po­ten­tially avert­ing the need to make tough choices that could leave the leg­is­la­tion tan­gled in a po­lit­i­cal thicket.

“We want pro-growth tax re­form that will get the econ­omy grow­ing, that will get peo­ple back to work, that will give mid­dle-in­come tax­pay­ers a tax cut and that will put Amer­i­can busi­nesses in a bet­ter com­pet­i­tive play­ing field so that we keep Amer­i­can busi­nesses in Amer­ica,” Ryan said at an event hosted by the As­so­ci­ated Press. “That is more im­por­tant than any­thing else.”

Ryan, who had spent years blast­ing Wash­ing­ton pol­i­cy­mak­ers for not do­ing enough to tackle the deficit and the debt, had ear­lier pledged a “rev­enue-neu­tral” tax bill — one that did not change the amount of an­tic­i­pated fed­eral in­come. But the fail­ure of the GOP health-care leg­is­la­tion, which in­cluded a nearly $1 tril­lion rev­enue cut, has scram­bled party lead­ers’ plans.

Ryan spokes­woman Ash­Lee Strong said the speaker’s state­ment did not rep­re­sent a change in his po­si­tion.

“We in­tend to pur­sue a per­ma­nent tax re­form plan that abides by the rec­on­cil­i­a­tion rules,” Strong said in an email.

Pres­i­dent Trump added to the con­fu­sion about what the plan will in­clude when he told re­porters at a bi­par­ti­san tax meet­ing at the White House later in the day that wealthy Amer­i­cans could see a tax in­crease.

“I think the wealthy will be pretty much where they are,” Trump said be­fore a meet­ing with Democrats at the White House about the tax-cut ef­fort. “Pretty much where they are . . . If they have to go higher, they’ll go higher.”

Trump’s char­ac­ter­i­za­tion of the tax-cut ef­fort was at odds with a de­scrip­tion of the plan given a day ear­lier by Trea­sury Sec­re­tary Steven Mnuchin, who pre­dicted that many wealthy Amer­i­cans would get a tax cut. The only wealthy Amer­i­cans whose taxes would re­main flat would be those liv­ing in states such as New York and Cal­i­for­nia, Mnuchin said.

The con­flict­ing state­ments have made it dif­fi­cult for law­mak­ers to pre­dict what might fill in the gaps left by a one-page tax blue­print that the White House re­leased in April. That out­line in­cluded slash­ing the cor­po­rate tax rate, sim­pli­fy­ing the tax brack­ets that in­di­vid­u­als and fam­i­lies face, and elim­i­nat­ing the es­tate tax and al­ter­na­tive min­i­mum tax, among other things.

In re­cent weeks, Trump has re­ferred pub­licly to “tax cuts” rather than the “tax re­form” Ryan and Brady have dis­cussed. In Wed­nes­day morn­ing tweets, Trump promised “the big­gest Tax Cut & Tax Re­form pack­age in the his­tory of our coun­try” and urged Congress to move fast.

Af­ter the morn­ing House GOP meet­ing, Brady said that GOP lead­ers are work­ing with Trump and the White House on the tax bill. Some de­tails will be in­cluded in the tem­plate set to be re­leased later this month, but the text of the leg­is­la­tion will ul­ti­mately be crafted by the House Ways and Means Com­mit­tee.

“The House will be­gin with the bill, and we will con­tinue to have work to do af­ter the frame­work is laid out,” Brady told re­porters. “The pres­i­dent is all in on this, and not just tax cuts, be­cause that gives us a tem­po­rary stim­u­lus, but re­design­ing the code so we can com­pete and win any­where in the world.”

So far, the White House and GOP ne­go­tia­tors have ar­eas of over­lap but also ar­eas of dis­agree­ment in their tax-cut ap­proach.

They all want to cut tax rates and sim­plify the tax code, but they have not agreed on how much. Repub­li­can lead­ers have dis­missed con­cerns about the lack of in­for­ma­tion, say­ing that the tax dis­cus­sion is still in the early stages and that de­tails will be worked out by the rel­e­vant com­mit­tees.

“It’s the be­gin­ning of a very im­por­tant process to achieve, for the first time in a gen­er­a­tion, over­haul­ing our tax sys­tem and giv­ing mid­dle-class fam­i­lies a much-de­served break,” Ryan told re­porters af­ter the GOP meet­ing Wed­nes­day. “The House, the Se­nate and the White House are start­ing from the same page and the same out­line, and then the tax writ­ers are go­ing to take it from there on the de­tails.”

Trump has pro­posed low­er­ing the cor­po­rate tax rate from 35 per­cent to 15 per­cent, while House GOP lead­ers be­lieve a rate in the low to mid-20s is more po­lit­i­cally vi­able. They are also de­bat­ing whether to make the tax cuts retroac­tive so that they af­fect all in­come earned in 2017, or whether to make the changes prospec­tive, af­fect­ing in­come earned in 2018 and be­yond. They also haven’t agreed on what pro­por­tion of the changes should be tem­po­rary or per­ma­nent. Trump has promised the big­gest tax cut in U.S. his­tory.

But leg­is­la­tors have not said what tax breaks they plan to elim­i­nate to off­set the rev­enue lost from steep tax-rate cuts, which some econ­o­mists have said could re­duce govern­ment re­ceipts by more than $5 tril­lion over 10 years.

Brady also re­minded mem­bers that House and Se­nate bud­get writ­ers will need to reach an agree­ment in mid-Oc­to­ber on bud­get lev­els for 2018 to ease the path to pass­ing an even­tual tax bill. They need to pass match­ing bud­get res­o­lu­tions to trig­ger a process called “rec­on­cil­i­a­tion,” which al­lows them to pass changes to the tax code through a sim­ple ma­jor­ity in the Se­nate.

Repub­li­cans hold 52 of the Se­nate’s 100 seats, and if they don’t have match­ing bud­get res­o­lu­tions, they would need 60 votes in the Se­nate to pass a new tax plan.

Many con­ser­va­tives, how­ever, have been un­will­ing to sign off on a bud­get un­til they see the full de­tails of the tax pro­posal. Op­po­nents of the bud­get plan say they went along with GOP lead­ers’ pleas this year that they had to pass a bare-bones bud­get to pave the way for re­peal­ing and re­plac­ing the Af­ford­able Care Act. Con­ser­va­tives went along, only to see lead­ers strug­gle and fail to fol­low through on that prom­ise.

Rep. Dave Brat (R-Va.) was among those who said he is not will­ing to vote for a bud­get that could lead to an­other fail­ure, this time on tax pol­icy.

“We opened the bud­get gate for that to hap­pen,” Brat said. “You get burned once. Sec­ond time around: Nope, put it in writ­ing.”

“I don’t un­der­stand why there are no de­tails, es­pe­cially since our lead­er­ship said we would have de­tails on tax re­form months ago.” Rep. Mark Mead­ows, House Free­dom Cau­cus chair­man

JIM WAT­SON/AGENCE FRANCE-PRESSE/GETTY IMAGES

House Speaker Paul D. Ryan (R-Wis.) at­tends a news con­fer­ence Wed­nes­day af­ter a closed-door meet­ing on Capi­tol Hill to dis­cuss Repub­li­cans’ ef­forts to cut cor­po­rate and in­di­vid­ual taxes.

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