Trump’s tax plan might include compromise
President: “Once in a lifetime opportunity”
President Trump’s upcoming push for his tax cut plan next month will include compromises that will limit some of its current benefits for the nation’s richest taxpayers, according to White House officials.
The compromises will include ending a 23.8% preferential tax rate for hedge-fund managers, or the so-called carried interest rate, White House legislative affairs director Marc Short told USA TODAY. “He’s not just open to it,” Short said. “I would say, frankly, he wants it.”
Retaining parts of a state and local tax deduction that benefits many middle-class families in blue states is also an area where Trump is expecting compromise as House Republican negotiators hash out legislation capable of winning the support of a number of party members representing high-tax blue states such as New Jersey and New York, Short said.
Later in November, Trump may also make his first address from the Oval Office to promote his plan to the nation, said sources involved with the planning who spoke on condition of anonymity because the plans were not final.
During a donor briefing last week in Orange County, Calif., Short said Trump is open to ideas being discussed on Capitol Hill, including a “reverse cap,” meaning taxpayers under a certain income could retain the benefit, according to one attendee who also spoke on condition of anonymity.
Changes Trump wants to the preferential carried interest income tax rate are unlikely to be supported by House Republican negotiators, leaving it as a bargaining chip in the Senate, where the fight over his plan is likely to be far fiercer.
The key to Trump’s success in selling the plan to middle America, which he’s dubbing a “middle-
class miracle,” may be whether he can convince Americans that he is breaking with traditional Republican orthodoxy on taxes benefiting the wealthy. Trump will have to make some significant compromises before Democrats agree with him.
Trump’s blueprint collapses individual income tax brackets to three, cuts the top corporate tax rate dramatically and creates a new top rate for small businesses that is lower than the top rate for individuals. It also eliminates two taxes paid entirely by the rich, while taking away a deduction for state and local taxes that is used most heavily in some of the most wealthy, and Democrat-dominated, states.
The plan is drawing criticism for eliminating the estate tax — which benefits the wealthy — while scrapping a state and local deduction benefiting many taxpayers living in high-cost states. At the same time, it could balloon the debt by trillions, which Republicans argue would be offset by increased economic growth.
During a bipartisan meeting on Wednesday with the Senate Finance Committee, Trump said his plan is something that should get bipartisan support.
“This is a once-in-a-lifetime opportunity, in my opinion,” Trump said, calling it the largest tax cut in U.S. history. He joked with Sen. Ron Wyden of Oregon, the committee’s top Democrat, that it should get unanimous support. Wyden did not respond but smiled broadly.
The White House appears willing to make some compromises. White House Council of Econom-
The president’s proposals could balloon the national debt by trillions, which the GOP says would be offset by economic growth.
ic Advisers Chair Kevin Hassett said Trump has given Congress a “huge amount of leeway” to get a bill that gets broad support.
Yet it’s far from clear that the trade-offs under consideration will be enough for Democrats.
The challenges for Trump in ferrying his tax plan through Congress were on display Wednesday. After the bipartisan meeting, only Republican Sens. John Cornyn, John Thune and Pat Toomey spoke to reporters. Cornyn said the meeting was “enormously productive,” and Toomey said there were areas of bipartisan overlap. Yet no Democrats joined them, they didn’t specify those areas and refused to take questions from reporters.
Later, during a call with report- ers, Sen. Bob Casey of Pennsylvania, a Democrat up for re-election in a state Trump won last November, said Republicans aren’t “serious” about a plan primarily benefiting the middle class.
“They don’t seem to be serious despite their rhetoric,” Casey said, calling it a “strange credulity” that corporate rate cuts will benefit the middle class.
Democrats are also skeptical Trump will keep his word, based on recent experience, including Trump’s reversal after negotiating with Democrats on a program for undocumented immigrants brought to the United States as children. They are also worried about being used to create an impression of bipartisanship even as they were excluded from the initial drafting of the plan.
“The ignoring (of Democrats)
is ongoing,” said Casey.
It was just two days before that Trump excoriated Democrats in a Rose Garden news conference, saying they are “obstructionists” who “basically just want us to do badly.”
In another sign of Trump’s offensive posture, White House officials seated Sen. Claire McCaskill, a Missouri Democrat, next to Trump instead of Wyden.
According to an individual close to the White House who dined with Vice President Pence last week, the White House is angry at McCaskill after she’s criticized the tax plan during a series of recent town halls in her state.
“It’s hard to support something when we haven’t seen any details about what is being proposed,” McCaskill said in a statement following the meeting.
McCaskill is among the Senate’s most vulnerable Democrats sitting for re-election, and in a recent rally in Springfield, Mo., Trump urged her constituents to “vote her out” if she doesn’t support the plan.