Senate Republicans said Wednesday that they are making some progress on tax reform as President Donald Trump and top aides expressed optimism that they will be able to avoid the pitfalls that have halted efforts to repeal and replace the Affordable Care Act.
“I share his optimism so long as it’s cautious optimism, as with everything around here,” Sen. James Risch, R-Idaho, said. “But it seems as if there’s more unanimity regarding tax reform than health care.”
The proposed framework would reduce taxes for many workers and cut down the number of tax brackets. It would also substantially reduce corporate taxes and rates for some small businesses.
“Get the cash out of the hands of the government and into the entrepreneurs, to the free market people, to consumers, to hard-working Americans so they can use those dollars the way they think they should be spent,” Risch said.
Sen. David Perdue, R-Ga., believes the Republican plan would be a boon for businesses and the middle class.
“The president wants to make American companies and therefore American workers more competitive with the rest of the world,” he said.
Most deductions would be eliminated, except for mortgage interest and charitable contributions, but the standard deduction would be approximately doubled.
“The deductions are 100 years of amalgamated accumulation of incentives that the federal government, these bureaucrats and politicians here in Washington have given to the American economy and to American individuals,” Perdue said.
Although Trump and others have expressed hope that Congress can get something on his desk by the end of 2017, the president bristled at the notion that his time is running out.
“You look at taxes, many people have tried to do it, not since Reagan has there been anything like this,” Trump said Tuesday. “So in terms of time, I’ve been here only nine months.”
Kellyanne Conway, a top aide to the president, defended Trump’s record in comparison to President Barack Obama.
“Remember, Dodd-Frank, Obamacare with Democratic control of the House and Senate, those didn’t get passed in Obama’s first year,” she said. “It took him more than a year to do that.”
She then rattled off a long list of non-legislative accomplishments the president has had, including pulling out of the Trans-Pacific Partnership, cutting hundreds of regulations, and getting Neil Gorsuch onto the Supreme Court.
According to Commerce Secretary Wilbur Ross, the passage of a budget resolution in the Senate this week would be “a big, giant step forward.” He is confident that will lead to successful passage of a tax reform bill that would be a major victory for the administration.
“This is going to be the only tax reform in 31 years, it’ll be the lowest corporate rate in something like 80 years,” he said. “It’s an enormous, enormous achievement because of all the competing special interest groups.”
Conway said the president expects the tax reform package to earn bipartisan support, but some Democrats remain highly skeptical.
“I think it depends on what that tax reform looks like,” Sen. Martin Heinrich, D-N.M., said. “The problem that I see right now is that the budget reconciliation package that the Republicans are putting forward actually makes life harder on a lot of low income and middle income working people.”
Critics say the framework Republicans have released could leave some lower income workers paying higher taxes while cutting taxes for the wealthy by hundreds of thousands of dollars. Administration officials dispute those calculations and insist many will benefit indirectly from the proposed changes as well.
Although Heinrich agrees with the goal of creating a more competitive tax system, he suggested this is not the way to do it.
“I think we should use tax reform to make our country more competitive, to invest in our communities,” he said, “and if you’re going to create tax relief, it should be focused on the middle class and on working people, not on handing out goodies to trust-funders and people who are very, very comfortable in their lives.”
Sen. Chris Van Hollen, D-Md., also argued the benefits are unfairly weighted toward the wealthy.
“It’s great if you’re at the very top. If you’re in the top one percent, there’s a big tax windfall,” he said. “But some things will hit Maryland middle class taxpayers especially hard.”
In particular, he cited the possible elimination of the state and local tax deduction, which many Maryland residents currently take advantage of. Republicans argue the deduction forces the federal government to subsidize states with high taxes.
Risch acknowledged that the top earners do see significant tax cuts under the framework, but since they pay most of the taxes in the country, that is only natural.
“Obviously whoever pays taxes, when you cut taxes, those that are in that category are going to end up in a little better position,” he said.
Still, many Democrats are opposed to any tax plan that is not squarely focused on the middle class and small business owners.
“If we’re going to give people tax relief it should be people who are actually struggling to make a living and who are going to be investing in small businesses, not giving somebody on Wall Street a tax break and saying that somehow that’s going to trickle down,” Heinrich said.