Talk of tax cut dis­ap­pears af­ter midterm elec­tions

Trump promised re­lief for mid­dle-class peo­ple

The Washington Times Weekly - - Politics - BY DAVE BOYER

Tax cut? What tax cut? The mid­dle-class tax re­lief that Pres­i­dent Trump promised vot­ers be­fore the midterm elec­tions has all but van­ished from the con­ver­sa­tion in Wash­ing­ton.

On Oct. 22, Mr. Trump said the White House and con­gres­sional Re­pub­li­cans would be “putting in a res­o­lu­tion some­time in the next week or week and a half, two weeks.”

“We’ll do the vote af­ter the elec­tion,” Mr. Trump said of the tax cut, which he de­scribed at nu­mer­ous ral­lies as a 10 per­cent cut for mid­dle-class work­ers.

But since Elec­tion Day, there’s been no move­ment in the House Ways and Means Com­mit­tee, where tax leg­is­la­tion starts. Nor was the tax cut men­tioned in the wake of a closed meet­ing be­tween the pres­i­dent and top Se­nate Re­pub­li­cans late last week on their pri­or­i­ties for the re­main­der of the year.

When law­mak­ers re­turn from the Thanks­giv­ing hol­i­day, they’ll be work­ing to avert a par­tial gov­ern­ment shut­down by com­plet­ing fund­ing for the Depart­ment of Home­land Se­cu­rity and other agen­cies by Dec. 7.

The White House didn’t re­spond to an in­quiry on any plans for mov­ing ahead with a tax cut in the lame-duck ses­sion of Congress.

A spokesman for Ways and Means said that the com­mit­tee “will stand by” the com­ments of Chair­man Kevin Brady, Texas Repub­li­can, who has said an­other tax cut was “con­tin­gent on Re­pub­li­cans hold­ing the House and the Se­nate.”

Re­pub­li­cans lost the House, of course, with Democrats scor­ing a net gain of at least 37 seats. The GOP says the prospect for an­other round of tax cuts un­der Demo­cratic lead­er­ship next year is dim.

“None­the­less, we’re go­ing to con­tinue to push for more re­lief for mid­dle-class tax­pay­ers and see if there is some com­mon ground we can find with Democrats with­out trig­ger­ing tax hikes on fam­i­lies or lo­cal busi­nesses,” Mr. Brady said.

House Ma­jor­ity Whip Steve Scalise, Louisiana Repub­li­can, said af­ter the elec­tion that GOP ef­forts to im­ple­ment a mid­dle-class tax cut and make per­ma­nent the tax cuts of 2017 will be “very dif­fi­cult to get … ac­com­plished once Nancy Pelosi is speaker for at least two-year pe­riod.”

Rep. Bill Pascrell Jr., New Jer­sey Demo­crat and a mem­ber of the Ways and Means Com­mit­tee, in­di­cated that Democrats will be push­ing at least one new tax mea­sure early next year. He said he’ll lead an ef­fort to fully re­store state and lo­cal tax de­duc­tions that were lim­ited by the 2017 tax cuts, an un­pop­u­lar re­sult in high-tax states such as New Jer­sey.

“With a new guard in Wash­ing­ton, a bet­ter day is com­ing,” Mr. Pascrell said. “Both through the Ways and Means Com­mit­tee and leg­is­la­tion, I will be fight­ing tooth and nail to see the SALT de­duc­tion re­stored for New Jer­sey. We won’t rest un­til our tax­pay­ers get their money back and are made whole again.”

The 2017 GOP tax bill set a $10,000 cap on state and lo­cal tax de­duc­tions. Mr. Pascrell’s of­fice said in his dis­trict, the av­er­age de­duc­tion was more than $18,000, with the av­er­age tax­payer in Ber­gen County claim­ing $24,783.

Re­pub­li­cans were count­ing on the pos­i­tive eco­nomic ef­fects of last year’s ma­jor tax re­form and in­di­vid­ual rate cuts to bol­ster GOP can­di­dates in the midterm elec­tions, when the pres­i­dent’s party usu­ally loses seats in Congress.

But as GOP voter en­thu­si­asm lagged be­hind Democrats in the fall, Mr. Trump started promis­ing a se­cond round of tax cuts, this time to ben­e­fit only mid­dle-class house­holds. “We are study­ing very deeply right now round the clock a ma­jor tax cut for mid­dle in­come peo­ple,” he told re­porters on Oct. 20.

In Sep­tem­ber, the House passed a three-bill pack­age known as Tax Re­form 2.0, but the Se­nate failed to take up the mea­sures. The bills would have made per­ma­nent the 2017 tax cuts for in­di­vid­u­als, as well as ex­pand re­tire­ment and ed­u­ca­tion ac­counts. Repub­li­can lead­ers said it would have given an­other boost to the econ­omy; the Joint Com­mit­tee on Tax­a­tion said it also would have added $627 bil­lion in deficits over the next decade.

A big part of the ear­lier, $1.5 tril­lion tax cut was a re­duc­tion of the cor­po­rate tax rate from 35 per­cent to 21 per­cent. A Repub­li­can Na­tional Com­mit­tee poll be­fore the elec­tion found that two-thirds of Amer­i­cans be­lieved that law ben­e­fited “large cor­po­ra­tions and rich Amer­i­cans.”

There is no con­sen­sus in Congress on how to off­set an­other round of tax cuts in the bud­get. The Trea­sury Depart­ment said last month that the fed­eral bud­get deficit in­creased to $779 bil­lion in fis­cal year 2018, a 17-per­cent in­crease from the pre­vi­ous year, partly due to the 2017 tax cuts.

It was the high­est deficit in six years, as spend­ing in­creased by about 7 per­cent and cor­po­rate tax re­ceipts dropped by about a third. Over­all, tax re­ceipts were up slightly for the fis­cal year but not enough to keep up with spend­ing.

In­ter­est on the na­tional debt rose by $62 bil­lion in fis­cal 2018 over the pre­vi­ous year to $325 bil­lion — twice as much as the gov­ern­ment spends on the departments of Trans­porta­tion and Home­land Se­cu­rity com­bined, ac­cord­ing to the Com­mit­tee for a Re­spon­si­ble Fed­eral Bud­get. The non­profit group said un­der cur­rent pro­jec­tions, an­nual in­ter­est pay­ments on the debt could top $1 tril­lion by 2030.

Be­fore the elec­tion, Mr. Trump said he ex­pected that the mid­dle-class tax cut would be “net neu­tral,” or off­set with spend­ing cuts. Tax an­a­lysts say fail­ure to off­set a tax cut of that size with spend­ing cuts would add as much as $2 tril­lion in deficits over the next decade.

Trea­sury Sec­re­tary Steven T. Mnuchin told Congress in 2017 as law­mak­ers were de­bat­ing the first tax cut that the re­lief would pay down fed­eral debt. In­stead, fed­eral deficits are fore­cast to top $1 tril­lion within the next year and re­main above that level.

Mr. Trump asked his Cab­i­net sec­re­taries last month to cut at least 5 per­cent from their agency bud­gets and re­port back to him this month with the pro­posed spend­ing re­duc­tions. The De­fense Depart­ment, which re­ceived a record $716 bil­lion bud­get for the cur­rent fis­cal year, is rais­ing ob­jec­tions to pos­si­ble cuts.

The Con­gres­sional Bud­get Of­fice pre­dicts the 2017 tax cuts will im­prove the U.S. econ­omy over the next 10 years by boost­ing house­hold in­come and busi­ness rev­enue. CBO fore­cast that the tax cuts will in­crease to­tal eco­nomic out­put, on av­er­age, by 0.7 per­cent­age points per year. The non­par­ti­san of­fice also pre­dicted the tax cuts will in­crease wages and cap­i­tal in­vest­ment, and re­duce the un­em­ploy­ment rate.

CBO projects that deficits will in­crease cu­mu­la­tively by $1.9 tril­lion through 2028 due to the tax cuts.

AS­SO­CI­ATED PRESS

When Repub­li­can voter en­thu­si­asm lagged be­hind Democrats in the fall, Pres­i­dent Trump started promis­ing a se­cond round of tax cuts, this time to ben­e­fit only mid­dle-class house­holds.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.