Login

Trump presses for new course in tax debate

He calls on GOP to slash mandate in health care law

As Republican lawmakers worked toward a delicate compromise on a $1.5 trillion tax cut, President Donald Trump threw himself back into the discussion Monday, suggesting that Republicans could slash taxes even further by repealing the health care law's mandate that most people have health insurance.

After a long day of meetings in the Philippines, Trump took to Twitter to congratulate House and Senate Republicans for making progress on tax cut legislation during his 12-day trip through Asia. Then he pressed them to change course.

"Now, how about ending the unfair & highly unpopular Indiv Mandate in OCare & reducing taxes even further?" Trump said, referring to the health law's mandate that people purchase health insurance. "Cut top rate to 35% w/all of the rest going to middle income cuts?"

Trump's latest suggestions came as the Senate Finance Committee began debating the bill and considering amendments, a process that could continue all week.

[PRESIDENT TRUMP: Timeline, appointments, executive orders + guide to actions in first 200 days]

There have been complaints from wealthy GOP donors that the Republican tax bills would not do enough to lower their taxes, though several studies have found that the wealthy would be major beneficiaries of both the House and Senate plans.

An analysis released Monday by Congress' nonpartisan Joint Committee on Taxation found that the Senate overhaul bill would increase taxes for some 13.8 million moderate-income American households.

Trump and the Republicans have promoted the legislation as a boon to the middle class, bringing tax relief to people with moderate incomes and boosting the economy to create new jobs.

"This bill is not a massive tax cut for the wealthy. ... This is not a big giveaway to corporations," Sen. Orrin Hatch, R-Utah, chairman of the Senate Finance Committee, insisted as the panel had its first day of debate on the Senate measure.

Hatch also downplayed the analysis by congressional tax experts showing a tax increase for several million U.S. households under the Senate proposal. Hatch said "a relatively small minority of taxpayers could see a slight increase in their taxes."

The committee's senior Democrat, Sen. Ron Wyden of Oregon, said the legislation has become "a massive handout to multinational corporations and a bonanza for tax cheats and powerful political donors."

The analysis found that the Senate measure would actually increase taxes in 2019 for 13.8 million households earning less than $200,000 a year. That group, about 10 percent of all taxpayers, would face tax increases of $100 to $500 in 2019. There also would be increases greater than $500 for a number of taxpayers, especially those with incomes between $75,000 and $200,000. By 2025, 21.4 million households would have steeper tax bills.

The analysts previously found a similar magnitude of tax increases under the House bill.

Among the biggest differences in the two bills that have emerged: the House bill allows homeowners to deduct up to $10,000 in property taxes while the Senate proposal unveiled by GOP leaders last week eliminates the entire deduction. Both versions would eliminate deductions for state and local income taxes and sales taxes.

Senate Majority Leader Mitch McConnell, R-Ky., asked whether the Senate's proposed repeal of the property tax deduction could bring higher taxes for some middle-class Americans, acknowledged there would be some taxpayers who end up with higher tax bills.

"Any way you cut it, there is a possibility that some taxpayers would get a higher rate," McConnell told reporters after a forum in Louisville, Ky., with local business owners and employees. "You can't craft any tax bill that guarantees that every single taxpayer in America gets a tax break. What I'm telling you is the overall majority of taxpayers in every bracket would get relief."

MOVE TO FLOOR VOTE

Republicans have been navigating a challenging path in their effort to pass the most sweeping overhaul of the tax code in more than 30 years by the end of this year. Trump's wishes, often expressed on social media, have at times steered the internal deliberations over the bill off course.

Lawmakers last month were considering making changes to 401(k) retirement accounts as a way to raise revenue before Trump quashed the idea on Twitter.

The key House leader on the effort, Rep. Kevin Brady, R-Texas, said he's "very confident" that Republicans "do and will have the votes to pass" the measure this week.

Trump plans to head to Capitol Hill on Thursday to speak with the Republican members of the House of Representatives, before a planned vote later in the day on the chamber's tax bill.

Deputy White House press secretary Raj Shah said in a statement that the president would speak to House Republicans ahead of the tax vote "about how important cuts and reform are to jumpstart our economy, make our businesses more competitive, and let hardworking Americans keep more of their well-earned paychecks."

Senate Majority Whip John Cornyn says he wants a floor vote on that chamber's bill the week of Nov. 27.

Brady, chairman of the House Ways and Means Committee, said he doesn't expect major changes to the bill as it moves to a final vote in the House. Still, he said Trump's call for removing the requirement to have health insurance as part of the tax agreement "remains under consideration."

The Congressional Budget Office and the staff of the Joint Committee on Taxation estimate that repealing the mandate starting in 2019 would reduce federal budget deficits by $338 billion between 2018 and 2027 relative to the budget office's most recent baseline.

While many Republicans in the House and the Senate have echoed Trump's desire to repeal the mandate, they have been wary of injecting the politics of health care into the debate over taxes. Several top Republicans have warned that including the provision would draw opposition and make passage tougher.

Although Trump must sign the eventual legislation, Republican lawmakers have shown a willingness to break with his wishes. Trump originally called for a 15 percent corporate tax rate, but Senate Republicans appear to have settled on a 20 percent rate that will be delayed by a year.

DEFICIT INCREASE

McConnell also needs 50 of 52 GOP Senate members to deliver on the goal of a tax overhaul, and they have a variety of competing demands. Some want to limit new deficits, while others want to deepest tax cut possible; some prioritize family tax breaks while others want to give businesses a boost; some have parochial concerns while others tend to be notoriously difficult to win on major pieces of legislation.

Tennessee's Bob Corker, Arizona's Jeff Flake and Oklahoma's James Lankford have all warned against fiscal recklessness in the bill. The tax plan going before the Senate Finance Committee on Monday would increase the federal deficit by about $1.5 trillion over the next decade -- before accounting for any economic growth that it might spur.

Georgia's David Perdue is the former CEO of both Reebok and Dollar General. South Dakota's Mike Rounds is a former partner for an insurance and real estate firm. For both, the business side of the tax plan is paramount.

If any new revenue measures went after businesses to boost offsets, that could be a problem for them.

So far, Congress's proposal to cut the corporate tax rate to 20 percent from 35 percent has gotten the most attention among business provisions. The House bill would deliver that cut next year, but the Senate plan would delay it until 2019. That won't sit well with Perdue, who has said that "delays on tax would damage our economy."

Pennsylvania's Pat Toomey, Texas's Ted Cruz and Kentucky's Rand Paul have emphasized that they want the steepest and longest-lasting tax cut possible. Deficits are of less concern to them; they believe Congress should focus on boosting the economy and deal with deficits by cutting spending.

Utah's Mike Lee and Florida's Marco Rubio insist their main tax priority is to double the Child Tax Credit from $1,000 to $2,000. The Senate plan would raise it to $1,650. Both senators say that's not enough.

"While we are glad to see an increase to the child tax credit, like the House bill, it is simply not enough for working families," they said in a joint statement. The two senators also want to apply the credit against payroll taxes as well as income taxes.

Information for this article was contributed by Alan Rappeport of The New York Times; by Marcy Gordon, Bruce Schreiner and Kevin Freking of The Associated Press; by Sahil Kapur of Bloomberg News; and by Damian Paletta and Mike DeBonis of The Washington Post.

A Section on 11/14/2017

Log in to comment