While wealthy taxpayers can expect to benefit from the economic growth associated with tax reform, they won′t receive targeted benefits in reform legislation, Senate Finance Committee Chair Orrin G. Hatch, R-Utah, said in an August 6 interview on Fox News.
“We’re certainly going to hit the rich, there’s no question,” Hatch said on Sunday Morning Futures. “They’re not going to get anything — hardly anything — out of any tax reform that we do.”
But Hatch also said he opposes White House chief strategist Steve Bannon’s reported proposal setting the top individual income tax rate at 44 percent. And when asked if he agreed with the proposed rates for individual income included in the tax reform outline the Trump administration released in April — 10, 25, and 35 percent — he said, “If we could get to those rates, that would be miraculous, and it would be very beneficial for the country.” The current top rate for individual income is 39.6 percent.
Hatch was skeptical that lawmakers could agree on those proposed rates, saying, “Looking at what we have going on in Congress right now — all the difficulties and the catfights across the board and the slowdown of everything by the Democrats, the desire not even to let legislation come forth — yeah, it would be very difficult to get there.”
Congressional Democrats fear a Republican tax reform plan would disproportionately benefit the wealthy. Rep. Richard E. Neal, D-Mass., ranking minority member on the House Ways and Means Committee, claimed that committee Chair Kevin Brady, R-Texas, said during a meeting with committee Democrats that tax reform wouldn’t “adhere to distributional neutrality.”
“And I think that that’s where the nub of the resistance perhaps will come in on the Democratic side,” Neal said on C-SPAN’s Newsmakers. “People at the top of the American economic ladder, they are not pining for tax cuts.” A tax reform proposal should be constructed “from the middle out, understanding that concentration of wealth in America is acknowledged by everybody,” he added.
But Neal indicated some flexibility regarding past Democratic proposals setting a marker for tax increases on incomes above $200,000 for individuals and $250,000 for couples.
“I think one of the challenges you have today — if you have a joint filing of $200,000 and you have three kids in college, you don’t feel very wealthy,” he said. “So I’m amenable to the idea of moving that ceiling to make adjustments based upon what the other side might be willing to give as well to the middle class in terms of more incentives.”
Two Deductions Would Survive
A tax reform bill will be “wide-ranging” and will include “everything from capital gains to corporate income taxes,” Hatch said. But he also said “there aren’t going to be an awful lot of personal deductions.”
“But a lot of those aren’t used anyway,” he said.
Hatch predicted only two deductions would survive. “One would be the charitable deduction and the other one would be the mortgage deduction,” he said.
The House Republicans’ “A Better Way” tax reform blueprint called for eliminating all itemized deductions except the mortgage interest and charitable contribution deductions.
Hatch also described the GOP's target for corporate rates, saying that while he thinks it’s possible to get down to 15 percent, as the administration has proposed, “it’s more likely” the rate will be set somewhere between 20 and 25 percent.
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