President Trump and a bevy of top White House officials praised the tax reform bill unveiled November 2 by House Republicans for its overarching policy ideas as well as specific provisions.
White House National Economic Council Director Gary Cohn said that the bill meets the president’s key objectives of tax relief for middle-income taxpayers and a much lower business tax rate, despite controversial provisions such as the partial repeal of the state and and local tax deduction.
“This is a bill that the president can support,” Cohn said, speaking onstage at an event hosted by the Economic Club of Washington, D.C.
Asked if he thought the bill had sufficient support in the House to pass, Cohn initially deflected the question, saying that the bill “just dropped this morning.” But he continued, “I am confident . . . [House Speaker Paul D. Ryan, R-Wis.] will be able to deliver a bill out of the House.”
Treasury Secretary Steven Mnuchin likewise praised the plan as a “bold, pro-growth bill that will overhaul our nation’s tax code.”
President Trump was no less enthusiastic, describing the bill as an “incredible plan to cut taxes” just prior to a meeting that afternoon with Republican members of the House Ways and Means Committee and other Republican congressional leaders at the White House. Trump showered praise on the lawmakers, calling out several by name, saying that they make “a really great team,” and adding, “We'll be with you all the way, 100 percent.”
Members of the Trump administration also praised specific provisions in the tax bill. Mnuchin highlighted the proposed 25 percent top rate for passthrough businesses while speaking in Los Angeles to the International Franchise Association. He said the passthrough rate would be the “lowest top rate for small and medium-sized businesses in more than 80 years” and would “make it easier to start your own business and easier to be your own boss.”
In addition, the 20 percent corporate tax rate, combined with a shift to a territorial system and a temporary allowance for full expensing, will lead to higher economic growth, which in turn will yield more revenue that can be used to pay down the debt, Mnuchin said. Tax simplification and tax cuts for individuals, meanwhile, would boost Americans’ take-home pay and increase labor force participation, he said.
Cohn emphasized that although the bill allows for a $1.5 trillion tax cut in accordance with the concurrent fiscal 2018 budget resolution and as scored by the Joint Committee on Taxation, the White House does not believe that tax reform will actually add $1.5 trillion to the debt. Still, he acknowledged, “We have to accept the [JCT] score to get the legislation through.”
“We happen to very strongly believe that we are going to way, way surpass what the score says on the revenue side of the equation,” he added.
Regarding the apparent decision by House taxwriters to abandon a phase-in of the corporate tax rate cuts, Cohn said, “We don’t want people to think about investing in our country – we want you to do it.”
Trump ran through a list of provisions in the bill, stopping to highlight particular ones along the way. Reducing the corporate tax rate to 20 percent is “truly one of the big things in the bill” that will “create tremendous success for companies and jobs.” Shifting from a worldwide to a territorial system likewise is a “tremendous change,” and according to Trump, the inclusion of full expensing is “one of the great sleepers in this bill” that will serve as a “great incentive for everybody to want to be business people.”
The president praised the bill for cutting and simplifying taxes for families, and he urged the Republicans to “have a bill on my desk, hopefully . . . by Thanksgiving.”
Despite a “barnstorming” effort in recent months by the White House to pressure Democratic senators in swing states to join the tax reform effort, Cohn said that the White House was ready to pursue tax reform on a party-line basis only, though it would prefer to have bipartisan support.
Kevin Hassett, chair of the Council of Economic Advisers, said at a November 2 Heritage Foundation event in Washington, “I understand that tax policy in this season appears to have become a partisan issue, but it shouldn’t be.” If the economy needs to be “friendly” to workers, he added, it needs to be friendly to firms.
Asked about the difference between permanent and temporary expensing, Hassett said the greatest positive effect would be from permanent tax changes, but Congress can’t always make changes permanent because of Senate rules, particularly the Byrd rule. “We’re respectful of regular order and looking to see where the profits leave,” he said. If full expensing is in place for five years, give or take, then economic modelers will need to consider how to model that, he said, adding that people will probably act as though full expensing will be renewed.