Trump, GOP May Shift Strategy to Get Tax Reform

Aaron Brown
August 1, 2017

On Thursday the "Big Six", top GOP tax reform leaders in Congress and the Trump administration - including Brady, Senate Majority Leader Mitch McConnell of Kentucky, Senate Finance Committee chairman Orrin Hatch from Utah, National Economic Council Director Gary Cohn and Treasury Secretary Steven Mnuchin - issued a joint statement on their strategy for changing the US tax code. But he also said the package would rely in part on assumptions about future economic growth that often prove controversial because critics of the White House plan have said it grossly overestimates how much new revenue tax cuts could bring in.

And while White House budget director Mick Mulvaney maintains, with Trump's apparent backing, that the administration wants Senate Republicans to remain focused on a health-care package, senior members of the chamber made clear Monday that they are ready to move on taxes. The committee believes that there should be a lower tax rate for the benefit of small businesses, and lower rates for all American businesses.

With the committees acting in early September, Short suggested they'll be able to determine whether the tax bill can garner bipartisan support or whether they'll need to use the budget reconciliation process to get around the Senate filibuster.

Minarik on July 28 published a short analysis of last week's GOP tax principles, correctly discerning a strategic shift away from what had been tried in the Senate with health care this summer. Jettisoning the proposed border adjustment tax, which would have been a source of new revenue but at the expense of some US businesses such as retailers, eliminated "a sticking point", Phillips added.

In Tuesday floor remarks, Schumer said that tax reform should focus on increasing "wages for working families, improving middle class job growth, promoting domestic investment while modernizing our outdated business and global tax system". When President Trump announced his tax reform plan in April, it did not include the BAT.

Setting various income cut-off demarcations and defining wealthy taxpayers in the tax code will be determined by Congress, the president's legislative adviser said. The administration also supports eliminating the existing estate tax, which kicks in for estates valued at more than $5.5 million.

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The committees are drafting the bills with the goal of making them revenue neutral, the White House legislative director said, but suggested that is not a top priority for the administration.

Under fast-track budget rules Republicans plan to use, they must make a choice: If their reforms are to be permanent, they can not add to the deficit over the next decade.

"We just had a cabinet meeting. the No. 1 topic at the cabinet meeting was talking about taxes and tax reform and what it would take to get tax reform done this year", Cohn said. Trump will headline a presidential re-election rally in West Virginia Thursday. "We'll start with markups right away, and it's important to show that we're all on the same page", Short said.

White House Press Secretary Sarah Huckabee Sanders declined to describe Trump's August travel schedule into red states. If they do add to the deficit, they must expire at the end of 10 years.

But that's what Republicans plan to do.

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