Republicans To Introduce Tax Reform Package By The End Of September
Republicans will introduce a tax package by the end of the month, but whether they can actually pass anything is another question entirely.
House Republicans say they will release a tax reform package by the end of the month:
The White House and GOP leaders plan to reveal new details of their plan to cut corporate and individual taxes the week of Sept. 25, and they are imploring lawmakers to reach a budget agreement that could smooth its passage, a key lawmaker told his colleagues Wednesday morning.
House Ways and Means Committee Chairman Kevin Brady (R-Tex.) told other House Republicans during a closed-door meeting that they needed to unify or the effort to cut taxes could fail, according to two people in the room.
That was a nod to the GOP’s aborted fight to replace parts of the Affordable Care Act earlier this year, during which the House and Senate tried to pass competing health-care bills, splitting the party and culminating in the effort’s failure. They want a much different outcome in their tax overhaul effort.
Brady told his colleagues that “the stakes are higher than ever that we deliver this year.”
Later 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.
The White House released a one-page blueprint in April of the tax law changes it wanted to see, which 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, President 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 each 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 tax discussion is still in the early stages and details will be worked out by the relevant committees.
The framework to be released later this month would be the first time the White House, House and Senate GOP leaders have issued a joint blueprint for their tax plan. It will have some details but still leave plenty of decisions unresolved, as lawmakers are planning to debate and decide on changes during House and Senate votes.
As is always the case with these matters, the devil will be in the details and in how those details change once the proposal is put forward by Congress. For example, it’s unclear whether the package would consist of the kind of comprehensive reform of the tax laws that we last saw in the late 1980s under President Reagan, or whether it would be more akin to the relatively minor changes we saw under Presidents Clinton and Bush which basically consisted of changes in income tax rates without real comprehensive changes to the tax code itself. Given the fact that it has been more than thirty years since the tax reform package that was passed in 1986, it seems clear that something comprehensive is what is called for, but whether that is politically possible is another question entirely. It’s also unclear whether the bill would consist of changes to individual tax rates, or whether it would include changes to corporate income taxes and other provisions of the tax code that Republicans, and even some Democrats have proposed in the past.
In addition to the structure of the bill, another important factor will be its impact on government revenues and what that could mean for future budget deficits. While Republicans like to point to the Reagan tax cuts as support for the idea that reducing tax rates can lead to increased tax revenue thanks to the fact that the lower rates help to stimulate economic growth, that hasn’t always been the case. Additionally, as we saw during the Regan years, even increased tax revenue doesn’t really have an impact on the budget deficit if it isn’t accompanied by real spending cuts, which is far easier said than done given the fact that the parts of the budget where cuts would actually make a difference such as defense and entitlement spending are essentially political third rails that both Republicans and Democrats will seek to protect. Additionally, it’s unclear that cutting contemporary tax rates would have any real impact on tax revenues at all. While there are points at which cutting high tax rates do lead to revenue increases, it’s not at all clear that cutting tax rates now would have that same impact. After all, it’s called the “Laffer Curve” for a reason. At some point, the return from cutting tax rates as far as economic growth and increased revenues are concerned simply does not exist. As a result, the only way to truly cut the deficit while decreasing tax rates would be to accomplish the largely politically impossible task of cutting programs that enjoy significantly broad support from both parties.
While we’ll have to wait another two weeks for the details of the tax plan, the political situation on Capitol Hill makes it clear that passing any kind of tax package will not be a simple matter. While Republicans will likely be able to get whatever they want to through the House of Representatives, the Senate will be a far different matter. Right off the top, Republicans will have to find a way to make whatever tax package they propose eligible for consideration under reconciliation rules that get around the sixty vote threshold that ordinary legislation would need to achieve to avoid a Democratic filibuster. If they’re unable to do that, then Senate Democrats will have considerable bargaining power over what kind of bill the Senate actually passes. For example, Democrats, and even many Republicans would be unlikely to support any tax package that is perceived as providing larger tax relief for wealthy Americans than the middle-class. Additionally, a tax package that purported to eliminate popular tax deductions such as those for state and local property taxes and mortgage interest would be unlikely to obtain enough votes to succeed in gaining the support of even eight Democrats the GOP would need to get such a package to a final vote. Even if the Senate is able to get the tax package considered under reconciliation rules, though, it’s not clear that they’d be able to get a tax package through on just a simple majority. As we saw with the failed effort to pass a health care form bill, the fact that the GOP has a majority in the Senate doesn’t mean that they can get the agreement needed to pass legislation and if they could it’s unclear that whatever passes the Senate will make it through the House.
Republican leaders on Capitol Hill and the White House appear to be hoping for a final vote on a tax package by the end of the year. The reasons for that are clear, of course. Pushing the debate over tax reform into 2018 only makes it less likely that anything at all will get passed before the midterm elections. As I said, the devil will be in the details. Right now, though, it appears that tax reform will likely be another uphill task for Republicans that could very well end up failing in the end.
And it wasn’t the case for Reagan either. Keep in mind Reagan reduced the highest tax rate from 70%, to 50% and then in 1986 down to 28%. Revenue as a % of GDP dropped from 19.1 percent in 1981 to a low of 16.9 percent in 1984, before rebounding slightly to 17.8 percent in 1989.
You have to go back to Kennedy to find an instance where reducing tax rates increased revenues in real terms.
Here are my best guesses.
It will far more cuts than reform.
It will entail borrowing money and giving it to the already wealthy.
It will tax capital far less than labor.
It will do very little for the economy (just like in 2001).
It will increase the deficit and result in more calls for spending cuts, preferably on the less fortunate.
It seems to me to be the same old flim flam.
I will believe it (and evaluate it) when I see it, and not a minute before.
@Davebo: I see this confusion a lot. My favorite example was in a 2010 online question-and-answer session with Tea Party Nation founder Judson Phillips:
It was clear from this exchange that Phillips was under the impression that “revenue” and “growth” aren’t just two interrelated varibles but are literally the same thing. This is the level of ignorance we’re dealing with.
@Kylopod: Well the economy under Reagan certainly improved but to claim that was due to tax cuts rather than a 12% reduction in the inflation rate is disingenuous if you ask me.
@Kylopod:
“Bush cut taxes in the early 2000s and the economy boomed.”
And here he is just lying through his teeth. However you describe the economy during the Administration of Bush the Younger, booming is not it.
@Davebo: @Moosebreath: I don’t think the guy was being intentionally dishonest. I think he’s flagrantly, laughably ignorant. A liar wouldn’t make such a boneheaded mistake as confusing growth with revenue. He may have been a Tea Party “leader,” but he’s essentially part of the legion of brainwashed drones docilely repeating right-wing talking points they picked up from talk radio or Fox or wherever.
And we’re trying supply side economics (again), because it’ll totally work this time * wink *
Welcome to Kansas, folks … 🙄
@Davebo:
I’m sure it probably had nothing to do with the massive capital injection caused by ballooning federal spending either. These people believe in leprechauns too.
@HarvardLaw92: But…. That was all the Democrats fault!
I’m confused. Do deficits matter now or not?
@Davebo:
Lol, stay tuned. If this abortion passes, we’ll certainly be hearing about how they don’t matter in the slightest. Why, Kansas tried this stunt and their economy boomed so much there were no deficits at all. It was like Christmas every day.
Oh wait …
@Davebo:
Is the President is a Democrat?
OT, but too good to not share: Shkreli has bail revoked, goes to prison.
Moral of story: when you have been convicted of fraud, are out on bail, and you’ve already pissed off the judge, do NOT make comments about the former First Lady that get the Secret Service involved.
How old is this guy? 34? You’d think he was old enough to know better.
This is just embarassing. I’m serious. This is the congress of the f*ing United States of America. And to all appearances the Republican senior leadership and their waddling penguin of a caucus seem to really believe that they can somehow reform the US tax code in a couple of weeks. Without hearings. Without input. In secret and behind closed doors. Obamacare took 15 months of some of the sharpest minds in government, the healthcare community, the insurers and the bean counters working together. And it was based on work that started with the Clinton era and had been constantly updated and refined since then. It was hundreds of pages of dense legislation that was then translated into tens of thousands of page of rules over the course of three years. Reforming the tax code is more complicated. And they really believe that is all just government time wasters and red tape standing in the way of knocking something out in a few late night sessions fueled by pizza. Some out there may think I was exaggerating when I said that all competent Republicans were primaried out of existence years ago. But this is proof that if anything, I’m understating the problem.
If these guys opened an auto parts store, they would stock one size of tires, one entire replacement engine, one type of oil, and 57 varieties of pine tree you hang on your window mirror.
Toomey was on Morning Joe saying that Trump told them he wanted a tax cut for the middle class.
Toomey then immediately pivoted to corporate tax rates, which he lied about, and cutting taxes on the rich to create jobs…another lie.
Republicans cannot sell what they want to do without lying about it. Period.
The question remaining is whether the supine press will simply help them do it.
Here we go:
There you have it, folks. Trickle-down economics is officially dead, gone, and buried–replaced by simple, bare, boldfaced lies.
@MarkedMan: Sort of like the U.K. government and Brexit, innit?
(I’ve swapped my political news-junkieness over to following the whole Brexit mess with morbid curiosity. It’s so much easier to watch a political system imploding when it isn’t your own country.)
Want to make sure no Millennials buy the houses Boomers are trying to unload and crash the housing market? Remove the mortgage exemption. Honestly, my generation is having a hard enough time buying a house with our overwhelming student loans, stagnating wages and grossly overpriced housing but now you want to take away one of the few things that helps ease the burden??
Wow. It’s like they want to provoke another housing crisis. Wonder who’s gonna benefit from that?
@grumpy realist:
I know plenty of 34yr olds with less sense then God gave a goose. Doesn’t help that many of them think money or moxie is an adequate substitute for brains.
I think I’m beginning to understand the modern Republican elected official: they are the people who watched “Stripes”* as kids and thought it was a documentary.
*For those who have never seen it, Stripes is a classic Bill Murray comedy in which a platoon of misfits and losers do everything they can to avoid work and practice for the big troop review while their competition puts in hundreds of hours of drill and conditioning. At the eleventh hour they have a kumbaya moment and stay up all night practicing their rad and cool and innovative routine that they just made up on the spot and win the competition. I haven’t seen it in decades but remember it was really funny. As a farce. Not a documentary.
@grumpy realist: Are we sure that guy isn’t like Trump’s son with a mistress or something?
At some point I’ll do a full analysis but I’m getting the giggles at the U.K.’s stated intention to make itself “Singapore on the Thames.” One of the major, MAJOR reasons for Singapore’s great attractiveness (and one that nobody in the know wants to talk about) is that it’s one of the very very few countries that has a double-taxation treaty with Taiwan which means that if you want to invest in Taiwan the way you do it is via a joint corporation based out of Singapore which allows you to take all your lovely profits back and NOT get doubly-taxed.
Yeah, like the Brits are going to be able to now turn around and sign a taxation treaty with Taiwan and not piss the Chinese off…