Trump Tax Cuts Face Big Hurdles 04/26 06:27
WASHINGTON (AP) -- President Donald Trump is proposing tax cuts for
individuals and businesses even as Washington struggles with mounting debt and
the populist president tries to make good on promises to bring jobs and
prosperity to the middle class.
Trump is scheduled Wednesday to unveil the broad outlines of a tax overhaul
that would provide massive tax cuts to businesses big and small. The top tax
rate for individuals would be cut by a few percentage points, from 39.6 percent
to the "mid-30s," said an official with knowledge of the plan.
Small business owners would see their top tax rate go from 39.6 percent to
15 percent, said the official.
The official, who spoke on condition of anonymity, was not authorized to
speak publicly about the plan before Trump's announcement,
White House officials already said the top corporate tax rate would be
reduced from 35 percent to 15 percent. The plan will also include child-care
benefits, a cause promoted by Trump's daughter Ivanka.
Trump dispatched his top lieutenants to Capitol Hill Tuesday evening to
discuss his plan with Republican leaders. The meeting lasted only half an hour.
Afterward, Sen. Orrin Hatch, R-Utah, called it "a preliminary meeting."
"They went into some suggestions that are mere suggestions and we'll go from
there," said Hatch, who chairs the powerful Senate Finance Committee.
The president's presentation Wednesday will be "pretty broad in the
principles," said Marc Short, Trump's director of legislative affairs.
In the coming weeks, Trump will solicit more ideas on how to improve it,
Short said. The specifics should start to come this summer.
Short said the administration didn't want to set a firm timeline, after
demanding a quick House vote on a health care bill and watching it fail.
However, Short added, "I don't see this sliding into 2018."
Republicans who slammed the growing national debt under Democrat Barack
Obama said Tuesday they are open to Trump's tax plan, even though it could add
trillions of dollars to the deficit over the next decade.
Echoing the White House, Republicans on Capitol Hill argued that tax cuts
would spur economic growth, reducing or even eliminating any drop in tax
"I'm not convinced that cutting taxes is necessarily going to blow a hole in
the deficit," Hatch said.
"I actually believe it could stimulate the economy and get the economy
moving," Hatch added. "Now, whether 15 percent is the right figure or not,
that's a matter to be determined."
The argument that tax cuts pay for themselves has been debunked by
economists from across the political spectrum. On Tuesday, the official
scorekeeper for Congress dealt the argument --- and Trump's plan --- another
The nonpartisan Joint Committee on Taxation said Tuesday that a big cut in
corporate taxes --- even if it is temporary --- would add to long-term budget
deficits. This is a problem for Republicans because it means they would need
Democratic support in the Senate to pass a tax overhaul that significantly cuts
Republicans have been working under a budget maneuver that would allow them
to pass a tax bill without Democratic support in the Senate --- but only if it
didn't add to long-term deficits.
Senate Majority Leader Mitch McConnell, R-Ky., said the Senate was sticking
to that strategy.
"Regretfully we don't expect to have any Democratic involvement in" a tax
overhaul, McConnell said. "So we'll have to reach an agreement among ourselves."
Democrats said they smell hypocrisy over the growing national debt, which
stands at nearly $20 trillion. For decades, Republican lawmakers railed against
saddling future generations with trillions in debt.
But with Republicans controlling Congress and the White House, there is no
appetite at either end of Pennsylvania Avenue to tackle the long-term drivers
of debt --- Social Security and Medicare. Instead, Republicans are pushing for
tax cuts and increased defense spending.
"I'm particularly struck by how some of this seems to be turning on its head
Republican economic theory," said Sen. Ron Wyden of Oregon, the top Democrat on
the Senate Finance Committee.
Sen. Bob Casey, D-Pa., said, "On a lot of fronts, both the administration
and Republicans have been contradictory, to say the least."
"There's no question we should try to reduce (the corporate tax rate), but I
don't see how you pay for getting it down that low," Casey said. "Fifteen
percent, that's a huge hole if you can't make the math work."