WASHINGTON — The White House today unveiled a wish list for tax reform that critics said rewarded the wealthy and Republican leaders said would serve as “critical guideposts” for lawmakers moving forward.
Gary Cohn, President Trump’s assistant for economic policy and director of the National Economic Council, told reporters at the daily White House briefing today that the first step would be to cut the current seven tax brackets to three: a 10 percent bracket, a 25 percent bracket and a 35 percent bracket.
The administration did not elaborate on the cutoffs for each bracket, but top earners would pay nearly 5 percent less.
The plan would double the standard deduction, currently at $6,350 for individuals and $12,700 for married couples.
“So, in essence, we are creating a zero tax rate — yes, a zero tax rate — for the first $24,000 that a couple earns,” Cohn said. “The larger standard deduction also leads to simplification, because far fewer taxpayers will need to itemize, which means their tax form can go back, yes, to that one simple page that I talked about earlier.”
It would repeal the alternative minimum tax and the inheritance tax, lower the capital gains tax from 23.8 percent to 20 percent, kill individual deductions except for mortgage interest and charitable giving, and cut the corporate tax rate from 35 percent to 15 percent.
“We’ve been meeting with the House and Senate, and they agree 100 percent… make business rates competitive, bring back trillions of dollars to create jobs, simplify personal taxes, create a middle-income tax cut. So those core principles are nonnegotiable, and that’s something that we all feel strongly about,” Treasury Secretary Steve Mnuchin said.
“As it relates to will it pay for itself, again, I think, as we’ve said, we’re working on lots of details as to this,” Mnuchin added. “We have over 100 people in the Treasury that have been working on tax and scoring lots of different scenarios. This will pay for itself with growth and with reduced — reduction of different deductions and closing loopholes.”
“…We will be working very closely, as I said, with the House and the Senate to turn this into a bill that can be passed and the president can sign. And there’s lots and lots of details that will go into how that will pay for itself.”
In a joint statement, Senate Majority Leader Mitch McConnell (R-Ky.), House Speaker Paul Ryan (R-Wis.), Senate Finance Committee Chairman Orrin Hatch (R-Utah), and House Ways and Means Committee Chairman Kevin Brady (R-Texas) didn’t commit to anything laid out by the White House, but said the principles would help as Congress and the administration worked together.
“Lower rates for individuals and families will allow them to keep more of their hard-earned money and empower them to invest more in their future. Getting tax rates down for American companies, big and small, will create new jobs and make the United States a more inviting place to do business,” the GOP leaders said. “With an eye toward fairness and simplicity, we’re confident we can rebuild our tax code in a way that will grow our economy, better promote savings and investment, provide our job creators with a competitive advantage, and bring prosperity to all Americans.”
Senate Minority Leader Chuck Schumer (D-N.Y.) said Trump’s tax reform outline “clearly makes life easier for the wealthy and special interests and makes life harder for middle-class and lower-income Americans.”
“It couldn’t come at a worse time. Clearly, the president and those at his level of wealth would benefit while tens of millions of American families are hurt,” he added, predicting “this plan will be roundly rejected by taxpayers of all political stripes.”
Sen. Bernie Sanders (I-Vt.) declared the plan would make the “rigged economy” even more rigged.
“At a time when Trump wants to make major cuts in education, health care, senior programs, nutrition and affordable housing, it is especially outrageous that he would propose the elimination of the estate tax and provide a $353 billion dollar tax giveaway to the wealthiest 0.2 percent – including a tax break of up to $4 billion to the Trump family,” Sanders said.
Trump left the unveiling up to Cohn and Mnuchin, telling a reporter at the conclusion of an education executive order signing, “Great plan. It will put people back to work.”
Rep. Chris Collins (R-N.Y.), an early supporter of Trump, said the president and House Republicans are “talking from the same page,” and the details are “what we will ultimately negotiate.”
“But myself and other fiscal conservatives have said we need to be budget-neutral on this,” Collins told CNN. “…So, on a dynamic scoring basis, not static scoring, if we can get this revenue-neutral — I have been a supporter of the border adjustment tax, which clearly was not part of the president’s proposal, as one of the pay-fors, which is going to support made in America with a small tariff, if you will, on goods and services not made in America.”
Sen. Chris Van Hollen (D-Md.) predicted the tax plan “will blow up the deficit and debt, probably $7 trillion, according to some estimates, over 10 years.”
“There’s no doubt that in the short-term, if you provide that kind of tax cut, you’re going to give the economy a big sugar high. The reason we did it during the economic recovery bill was the economy was in the gutter and we needed to put more money into people’s pockets so they’d go out and spend more,” he told MSNBC.
“Right now, the economy is close to full employment. There are still a lot of people who are hurting. We have a problem with wage stagnation, which is why I believe we do need tax relief for struggling working Americans, so that they can keep more of their dollars. But there’s no justification for giving a tax windfall to super wealthy people who are already doing just fine when it’s not going to, in the long term, help our economy, but add to our debt.”