ATF in the News · July 27, 2017

USA Today: White House and GOP leaders tout deal to cut taxes, but offer no details

Frank Clemente, executive director of the liberal group Americans for Tax Fairness, pointed to a 2018 budget resolution that passed the House Budget Committee with only Republican support that would have offset cut taxes with reductions to Social Security, Medicaid and Medicare.

The joint statement “revealed little about their true intentions, which is to craft a plan that will give massive tax breaks to millionaires and wealthy corporations at the expense of the middle class and working families,” Clemente said.

This article appeared in USA Today.


Herb Jackson wrote:

After three months of meetings, the White House and Republican congressional leaders said Thursday they were “confident that a shared vision for tax reform exists.” But they released almost no details about what that vision would look like.

“Discussions and negotiations will continue, details will continue to be worked out. But rest assured, we’re going to cut taxes — and we’re going to cut taxes this year,” Vice President Pence told a business group Thursday morning.

Later that day, Senate Majority Leader Mitch McConnell, House Speaker Paul Ryan, Senate Finance Chairman Orrin Hatch, House Ways and Means Chairman Kevin Brady, Treasury Secretary Steven Mnuchin and National Economic Council Director Gary Cohn issued a joint statement explaining the path forward.

The most significant revelation was hardly a surprise to anyone following the debate: The “border adjustment tax” — a corporate tax on imports — which House leaders were seeking to help domestic companies compete globally, is now considered dead.

But there was no explanation of how the Republicans plan to make up for the estimated $1 trillion that tax would have raised to offset lower rates. The joint statement did not even say whether the final plan would include the 15% corporate rate that President Trump sought in an April outline of “goals for tax reform,” or the 20% rate that was in a plan released last year by House Republicans.

And other than agreeing that “tax relief for American families should be at the heart of our plan,” there were no details about which families would get what.

The 600-word statement included a commitment to make taxes “simpler, fairer and lower for hard-working American families,” but there was no mention of what the tax brackets or the income cut-offs for those brackets would be, or what deductions and exemptions would be eliminated to fund lower rates.

Brady, the House Ways and Means chairman, told reporters that he believed the statement was significant because it shows unity behind “bold principles” for tax reform and an “urgency to deliver it this year.”

Yet how much of the tax cuts are “paid for” – offset by increases to other taxes, or elimination of deductions or credits – remains unclear.

That’s important. Cuts that are not offset have to sunset after 10 years under congressional budget rules. Business groups have said such temporary cuts would provide less of an economic boost because companies would want reliability before making investments.

The joint statement said “permanence” is a goal, but not a requirement.

Brady was one of the strongest advocates for border adjustment, and said Thursday he still believes it’s the best way to level the playing field between importers and exporters and stop the trend of companies incorporate overseas to avoid paying U.S. taxes.

“But in order for us to unify, it was important to set it aside, for now,” he said.

The National Retail Federation mounted a $5 million campaign against the border tax, including television ads aimed at Republican members of the Ways and Means Committee in their home states.

“By removing this costly element of reform, the way has been cleared for swift action on a middle-class tax cut that will put more money in the wallets of the American taxpayer,” the federation’s president said.

Other anti-tax groups, including the Club for Growth and Americans for Prosperity, made similar comments, pledging to work toward progress instead of battling against the border tax.

The U.S. Chamber of Commerce also applauded the announcement, saying it “bolsters our confidence that tax reform can be enacted this year.”

So far, Republicans have been working to devise a plan on their own, while Democrats repeatedly say the last time comprehensive reform happened, in 1986, it was bipartisan.

“Today’s threadbare joint statement shows Republicans continuing to flounder instead of inviting bipartisan progress on real tax reform for hard-working Americans,” said House Minority Leader Nancy Pelosi, D-Calif.

Frank Clemente, executive director of the liberal group Americans for Tax Fairness, pointed to a 2018 budget resolution that passed the House Budget Committee with only Republican support that would have offset tax cuts with reductions to Social Security, Medicaid and Medicare.

The joint statement “revealed little about their true intentions, which is to craft a plan that will give massive tax breaks to millionaires and wealthy corporations at the expense of the middle class and working families,” Clemente said.