House Ways and Means Committee Chair Kevin Brady, R-Texas, affirmed October 2 that all Americans will see lower tax bills under the GOP tax reform plan, just one day after Treasury Secretary Steven Mnuchin promised that the wealthy will not get tax cuts.
“I guarantee we are going to improve the lives of every American by driving down taxes and increasing their paychecks,” Brady said, adding that House lawmakers plan to pass a budget resolution that will pave the way for tax reform. A spokesperson for House Budget Committee Diane Black, R-Tenn., said the House expects to vote Oct 5 on the budget. The resolution includes reconciliation instructions for tax reform, allowing a bill to pass the Senate on a simple majority vote.
Brady and the rest of the “Big Six” group of congressional and White House Republicans released their unified tax reform framework on September 25, but the proposal has drawn criticism from Democrats and others, who say the plan’s benefits would go to the wealthiest at the expense of middle-income taxpayers. A harsh analysis from the Urban-Brookings Tax Policy Center estimated that over the long run, 80 percent of the plan’s benefits would go to the top 1 percent of taxpayers.
Brady cited a proposed increase in the child tax credit and plans to double the standard deduction as evidence that Republicans want American taxpayers to keep more of their money. “We want to make sure that this is a pro-family tax reform plan,” he said.
According to a tentative congressional schedule for legislative action obtained by Tax Analysts, Ways and Means plans to mark up tax reform legislation the week of October 23. The tentative schedule also suggests House passage of a tax reform bill in mid-November and approval by the Senate in late November, followed by a conference and then final passage in December, in time for President Trump to sign legislation by Christmas.
Mnuchin, speaking October 1 on ABC’s This Week With George Stephanopoulos, refused to say whether Trump would veto legislation lowering taxes on wealthy Americans. He also claimed the framework’s proposals to eliminate the estate tax, repeal the alternative minimum tax, and lower rates on passthrough businesses would not directly help Trump and other upper-income taxpayers. He added that the details worked out by congressional taxwriters will help Americans understand the results of tax reform and negate any need to see Trump’s federal income tax returns to determine whether the president personally benefits.
Lowering the tax rate on passthrough businesses from 39.5 percent to 25 percent will not result in lower tax revenues, Mnuchin said. Congress and the administration will construct “guardrails around those rules” for passthrough businesses to ensure wealthy Americans do not receive tax breaks, he said.
As for the deficit
front, Mnuchin said that on a static basis, the GOP plan would increase the deficit by $1.5 trillion, but that shortfall would be offset by $500 million from rolling over the current policy baseline and $2 trillion in additional growth from 2.9 percent GDP over the next 10 years. He said if the growth doesn’t materialize in the coming years, the Republican plans can be changed.
The importance of middle-income tax cuts was also discussed by House Speaker Paul D. Ryan, R-Wis., on CBS’s Face the Nation. Ryan said the objective of tax reform is to lower taxes for blue-collar workers and that lawmakers are considering enhancements to the child tax credit and the earned income tax credit.
Ryan declined to say whether the EITC would be expanded to childless workers, but he acknowledged that congressional taxwriters will be looking into incentives like the EITC that help “move people into work.”
Ryan also suggested that Democrats should have a hand in the process, despite Republicans’ use of the fast-track budget reconciliation process to eliminate the need for their votes in the Senate. The process also denies Democrats the ability to filibuster the bill, “because we think that would derail tax reform,” Ryan added.
But Senate Minority Leader Charles E. Schumer, D-N.Y., called budget reconciliation a partisan process that led to the demise of Republican bills to repeal the Affordable Care Act. Schumer, who also spoke on Face the Nation, said Democrats oppose any plan that gives tax cuts to the wealthy and increases deficits.
“Speaker Ryan keeps saying [the unified framework] helps the middle class. That’s not true,” Schumer charged. “What he’s saying and what the plan is are totally different.”
Democrats want Republicans to abandon their use of “fake numbers” to predict economic growth and tax reform’s impact on the deficit, Schumer said. “We want to work with them if they will change. They have to consult us. They can’t just put down a plan and say, ‘Bipartisanship is you guys come over and do what we want,’ when it’s against our principles,” Schumer said.
Democratic members of the House Budget Committee released an alternative budget resolution on October 2 that calls for tax reform that supports low- and middle-income families and drives “broadly shared prosperity” while “closing special-interest loopholes and making sure the wealthiest Americans pay their fair share.” The plan also calls for bolstering the Affordable Care Act.
David van den Berg contributed to this article.
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