White House readies tax overhaul plan

Joanna Estrada
September 25, 2017

Americans for Tax Reform President Grover Norquist, who has been involved in the plan's drafting but is not one of the Republicans briefed on the latest details, said a 20 percent corporate rate combined with five years of expensing would achieve the GOP's longstanding tax objectives. Trump has proposed cutting that to 35 percent; House Republican leaders want to cut it to 33 percent.

The tax reform debate is in serious flux, still devoid of key details and marked by far more open questions than answered ones. In the Senate, though nothing has been finalized, it is rumored that Senators Bob Corker (R-TN) and Pat Toomey (R-PA) - both of whom sit on the Senate Budget Committee - have reached agreement on the size and scope of tax reform that they think will garner enough support to pass out of committee and to the Senate floor before month's end. Or with a Congress that borders on the inept, KISS: keep it simple, stupids. They are divided over whether to add to the nation's soaring $20 trillion debt with tax cuts.

Advocates say this approach benefits small business, but most pass-through income goes to wealthy individuals and big businesses like hedge funds and large oil and gas pipeline companies organized as limited partnerships. For nearly a decade, corporate interests in Washington, from individual companies to the influential behemoths (the U.S. Chamber of Commerce and the Business Roundtable) have advocated for some form of corporate cut to about 23 percent, the worldwide average. House Speaker Paul Ryan has said a 15 percent rate is impractically low, with a rate somewhere in the low- to mid-20 percent range more viable to avoid blowing out the deficit. To do this, the House and Senate must pass matching budget resolutions that specify the size and impact of any tax cut measure.

A repeal of the state and local tax deduction is considered most likely since it would bring in the most money, raising north of $1 trillion over a decade by some estimates.

Fourth, business tax reform must not open up new loopholes for top earners to evade taxes.

Note: Next week, following the release of the tax reform framework, our team will provide a thorough analysis of the tax policies it contains and the implications for businesses - both in the United States and overseas. There are strong indications that there is the potential for a 28-37 percent tax cut for small businesses: settle for 30 percent and move on.

Why the delay in unveiling and passing a tax cut?

It should be easy to cut taxes with a Republican House, a Republican Senate and Donald Trump elected both as a Republican and as the candidate of pro-growth tax cuts.

Indeed, there are more Republicans who have a negative impression of McConnell (25 percent) than a positive one (17 percent).

But that doesn't mean they all need a tax cut.

"There are very few politically palatable revenue raisers or base broadeners available that can be used to help reduce the corporate tax rate to 20% or below", Tax Foundation president Scott Hodge told the Senate Finance Committee this week. Negotiators also want to simplify the tax code that individuals and families pay by eliminating certain tax brackets while also providing a large tax cut for the middle class. This is a step in the right direction. With the country in the ninth year of an economic recovery, the case for pure stimulus is weak, and digging a deep hole of debt by cutting taxes will make it harder to pay for other priorities.

House Republicans plan to hold a conference meeting on Wednesday, and public information about the plan is expected shortly afterwards.

Democrats are counting on special interests and the mainstream media to throw sand in the gears in hopes that any Congressional-written tax plan will collapse under its weight and complexity.

Mr Trump will travel to IN on Wednesday for a speech on tax issues that is expected to be "more substantive" than recent rallies that were meant to raise enthusiasm for an overhaul, a person familiar with the planning said.

Other reports by Click Lancashire

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