Trump administration officials and congressional Republican leaders are promising a new framework in two weeks for legislation that would overhaul the U.S. Tax Code—though they’ve shied away from releasing any details about how the changes would affect individuals or corporations.
President Donald Trump, however, told reporters that the plan would benefit the middle class, not the wealthy. “I think the wealthy will be pretty much where they are,” he said Wednesday afternoon. “They have to go higher, they’ll go higher, frankly. We’re looking at the middle class and we’re looking at jobs.”
For corporate taxes, Trump repeated his preference for cutting the corporate-income tax rate from 35 percent to 15 percent—though other Republicans have questioned whether it’s possible to take it that low. “We want 15 percent rate because that would bring us low, not by any means the lowest, but it would bring us to a level where China and other countries are,” he said.
Time is growing short for legislative action on taxes in 2017, and the promise of a framework during the week of Sept. 25—a document that House Ways and Means Chairman Kevin Brady described as the “core elements of tax reform” —comes as Trump is focusing on trying to attract Democrats’ support.
Three Democratic senators joined the president for a White House dinner Tuesday aimed at winning their support on a tax bill. Trump had another meeting scheduled Wednesday afternoon with a bipartisan group of moderate House members, the Problem Solvers. And he’s invited the Democratic leaders of the House and Senate, Nancy Pelosi and Chuck Schumer, to dine with him at the White House on Wednesday, according to two people familiar with the matter.
While such details as the corporate tax rate and the tax brackets that would apply to individuals are still unclear, Senator Joe Manchin, a West Virginia Democrat who dined with Trump Tuesday, said during a Bloomberg Television interview that the president is pitching tax relief for the middle class, not “a tax cut for the rich.”
Still, even amid the president’s bipartisan approach, lawmakers are laying the groundwork for getting legislation through the Senate without Democratic support.
During a closed-door meeting Wednesday, Brady thanked House Republicans for their hard work on a tax overhaul and emphasized that it’s more important than ever for the GOP to deliver on its tax promises, according to a person familiar with the meeting who asked not to be named. Brady, a Texas Republican, told members that following the framework’s release this month, the focus will turn to the House and Senate completing the budget process by mid-October, the person said. Brady added that the budget is necessary for a tax revamp.
Unblocking the Budget
House Budget Chairwoman Diane Black of Tennessee said Wednesday it’s unlikely that the budget resolution will reach the House floor this month. Republicans have to agree on a 2018 budget resolution—a necessary step to unlock the procedural maneuver they intend to use to pass the tax plan with 50 votes in the Senate while avoiding any Democratic filibuster. The party controls only 52 of the chamber’s 100 votes.
Members of the conservative House Freedom Caucus have said they won’t vote to pass a budget out of the House until they get more details on tax changes. Black said the outline coming from the so-called Big Six—the administration and congressional leaders who are shaping the tax framework—should help to assuage those members’ concerns.
If Congress follows Brady’s schedule and adopts a budget resolution by the middle of October, there will be 28 legislative days left on the House calendar in 2017. And Congress must act by Dec. 8 to fund the government or face a shutdown, which could distract from the tax debate.
Big Six
During a press conference last week, Brady, a member of the Big Six, wouldn’t confirm whether any specific decisions had been made and declined to offer a timetable for releasing details or marking up legislation. The other members of the Big Six are House Speaker Paul Ryan of Wisconsin, Senate Majority Leader Mitch McConnell of Kentucky, Senate Finance Chairman Orrin Hatch of Utah, Treasury Secretary Steven Mnuchin and National Economic Council Director Gary Cohn.
Ryan said the outline that’s coming this month would reflect agreement among the tax-writing committees in the House and Senate, and the administration. Subsequently, the committees will take feedback and write the bills in the weeks ahead.
“This is really the consensus of the tax writers themselves so that we’re working from the same page,” Ryan said during a press conference Wednesday. “The tax writers are going to take it from there on the details.”
Deficit Question
Hatch was less committal on the content and timing of any new tax framework. “It looks to me like there will be” a document released during the week of Sept. 25 that provides new details on the Republican tax plan, he told reporters on Wednesday. “But I’m not totally confident about that.”
In response to a question about whether Ryan will insist that a tax proposal balance its cuts with revenue raisers to avoid increasing the federal deficit, the speaker said during an Associated Press event Wednesday that economic growth is more important than anything else. Ryan and McConnell have both said previously that a tax plan should be revenue-neutral.
Ryan also said during the press conference he would love to have the Democrats working with the GOP “but we’re going to do it no matter what.”
Meanwhile, achieving bipartisan support in the Senate may be difficult. Earlier this year, 45 of the 48 Democratic senators signed a letter that set three conditions for supporting tax legislation: that it not add to the deficit, that it not increase the burden on the middle class and that it go through the regular order process in Congress.
On the House side, at least one member’s initial response to Wednesday’s news was less than enthusiastic.
‘Largely Vacuous’
“Unfortunately the Republican tax principles we have seen so far have been largely vacuous, and I fear their updated framework to be released later this month will only be more of the same,” Representative Richard Neal of Massachusetts, the top Democrat on the Ways and Means Committee, said in a statement.
Trump continues to put pressure on lawmakers to get a tax bill completed—he posted a Twitter message on Wednesday saying: “With Irma and Harvey devastation, Tax Cuts and Tax Reform is needed more than ever before. Go Congress, go!”
White House Budget director Mick Mulvaney said he thinks Democrats are interested in working together on a tax overhaul. “The question is will they have the political courage to look at the principles and the substance of the proposal and I hope they will,” he said.
The budget director added during an interview on Bloomberg Television that the Trump administration wants to see a 15 percent corporate tax rate and that an overhaul should simplify Americans’ ability to file taxes. He said the plan would help spur 3 percent annual economic growth.
“In order to get the size—the magnitude of the reductions that we want in the corporate and the individual rates and in order to get the sweeping reforms that we so desperately need—you absolutely will see an increase in the deficit in the short term,” he said. “But the payoff in the longterm is actually that promise of balanced budgets.”
—With assistance from Jennifer Epstein and Anna Edgerton
