WASHINGTON – A year after saying he would raise taxes on the rich, President Donald Trump is now pushing a proposal that instead would give those Americans an enormous tax break.
Trump gave few details at a Wednesday speech in Springfield, Missouri, instead offering very broad priorities: a tax break for the middle class; fewer “loopholes”; bringing home companies’ overseas profits; a much lower corporate tax rate.
Only on that final component did Trump attach a specific number – 15 percent as a goal, down from the current 35 percent maximum. And it is that piece that would provide a huge benefit to the wealthiest Americans, who own a disproportionate share of the nation’s businesses, either directly or through shares of stock.
Trump said providing that tax cut would help middle- and working-class Americans because businesses would hire more employees. “We must reduce the tax rate on American businesses so they keep jobs in America, create jobs in America, and compete for workers right here in America,” Trump said at Loren Cook Company, a manufacturer of fans and blowers. “Millions of struggling citizens will be lifted from welfare to work. They will love getting up in the morning. They will love going to their job. They will love earning a big, fat, beautiful paycheck.”
Democrats, whose help Trump would almost certainly need if he wants permanent tax law changes, were quick to criticize that approach.
“Giving huge tax cuts to businesses in the hopes that wealth will magically trickle down to hardworking Americans is pure folly, and not supported by the facts,” said Massachusetts Democrat Richard Neal, the ranking member on the House’s tax-writing panel.
And while Republicans and some Democrats argue that taxes are too high, taxes for all but the richest Americans are lower now than at any time since President Ronald Reagan took office, according to a HuffPost analysis of data from the nonpartisan Congressional Budget Office.
In years past, including as a candidate for president starting in 2015, Trump often spoke of the need for wealthier Americans to pay more in taxes. In August of that year in Iowa, Trump said he would increase the burden on those “making hundreds of millions of dollars” in income, “because right now they are paying very little tax.”
In May 2016, Trump told ABC News that “taxes for the rich will go up somewhat.”
If he still intends for that to happen, he offered no hint of it in a 34-minute speech that attacked the current code and Democrats who oppose him and his policies but gave no specific guidance on what he wants to see in a legislative proposal.
“I am fully committed to working with Congress to get this job done. And I don’t want to be disappointed by Congress, do you understand me?” he said. “I think Congress is going to make a comeback. I hope so.”
Trump’s earlier remarks notwithstanding, his plans even as a candidate heavily favored the wealthy. A plan analyzed by the conservative-leaning “Tax Foundation” would have dropped the top individual income tax rate from 39.6 percent down to 25 percent, and would have cost the Treasury $10 trillion over a decade, even assuming increased growth of the economy.
In October Trump promised the “Middle Class Tax Relief and Simplification Act,” which he claimed would reduce taxes for a middle-class family by 35 percent ― although he offered no specifics on how that would be achieved or even what constituted “middle class.” But like his previous plan, it would have cut the top corporate tax rate from 35 percent to 15 percent.
Since his election, Trump has been characteristically vague on the tax package he would like to see, sometimes emphasizing how it would be designed to help the middle class while sometimes focusing on cutting the corporate rate.
In the last week of April, as he tried to stack up accomplishments toward the end of his first 100 days in office, the White House released a single page of bullet points on what Trump wanted in tax reform. Those included the 15 percent corporate tax rate, but also included some specifics such as reducing the top individual rate down from 39.6 percent down to 35 percent and doubling the standard deduction.
At that time, Treasury Secretary Steven Mnuchin said the administration would have a detailed plan out by August ― a prediction he admitted last week would not happen. Instead, he said he hoped to see a bill pass Congress by the end of the year.
Even that goal appears optimistic, though, given the legislation Congress must pass in the coming few months, including a spending bill for the budget year that starts Oct. 1; an increase to the Treasury’s borrowing authority to pay for debt already incurred; and, given the destruction caused by Hurricane Harvey along the Gulf Coast, likely an emergency storm relief bill as well.
At this point, no actual legislation exists, and the process of coming up with a plan has been assigned to the so-called “Big Six”: Mnuchin, Trump’s top economic adviser Gary Cohn, Senate Majority Leader Mitch McConnell, House Speaker Paul Ryan and the GOP chairs of the two tax-writing committees.
That group has not indicated a timeline, either, although Ryan in a prepared statement Wednesday called tax reform “our top priority this fall.”
Anti-tax activist Grover Norquist, though, predicted that congressional Republicans would have a much easier time with taxes than they did trying to repeal the Affordable Care Act, because that law had powerful opponents in hospitals, doctors and insurance companies.
“Bottom line is tax reduction, tax reform is infinitely easier for Republicans to pass than healthcare,” said Norquist, president of Americans for Tax Reform. “Fewer moving parts, no organized opposition.”
Ryan and McConnell could pass a tax bill with only Republican votes under a special budget rule, but it would expire after 10 years unless it did not increase deficits ― an unlikely scenario, given the steep tax cuts Republicans want. To make deficit-increasing tax cuts permanent, Republicans would need eight Democrats in the Senate to vote with them to overcome a filibuster.