The White House still has expectations for tax reform, though.
With Congress’s recess about to end, eyes have turned to tax reform. But in a surprise twist, the White House has decided not to write its own tax reform plan, according to President Donald Trump’s head economic aide. From The Financial Times:
“The ‘big six’ have been meeting and have come up with an outline . . . and we have a good skeleton that we have agreed,” Mr Cohn said in a reference to the lawmakers, himself and Mr Mnuchin. “Now it is Chairman Brady’s time to get the [House] ways and means committee together to put flesh and bone on it, and they will do it next week when the House comes back into session.”
Cohn also did not tell FT if the White House still insisted on a 15% corporate tax rate, but just that Trump wants it as low as possible so businesses have the ability to create jobs here. FT continued:
He said the plan would preserve three of the biggest deductions for individuals: on charitable donations, mortgage interest payments and retirement savings. It would raise the standard deduction cap that applies to most tax filers, but would eradicate many other personal deductions, he said, adding that the White House also wanted to get rid of “death taxes”, Republican terminology for estate taxes, which will face resistance from Democrats.
Mr Cohn said the White House would be “excited” if Democrats worked with Republicans on a bipartisan bill. But he said the administration would use a process called reconciliation — which prevents a filibuster in the Senate where the Republicans have a thin 52-48 majority — that would allow tax reform to pass with a simple majority, but only if the legislation is revenue-neutral within 10 years.
The White House would also like a tax reform plan that included implementation of “a territorial system that would eliminate the need for US companies to pay additional taxes when they repatriate profits.” Cohn explained that these companies “have to pay extra taxes for bringing profits” back home, which is why they keep that money offshore. He continued:
The administration wanted to impose a one-time tax on overseas profits to encourage companies to bring money home, he said, but he declined to confirm that it would be the 10 per cent floated by Mr Trump.
“This is a big base-broadening exercise,” Mr Cohn said about the overall plan. “Revenue may decline in the medium term, but it will then explode for the government. When we grow the economy we will see substantial growth in revenue.”
Despite no plan from the White House, Cohn told FT that Trump will wrap his agenda around tax reform ASAP:
“Starting next week, the president’s agenda and calendar is going to revolve around tax reform,” Mr Cohn said in an interview. “He will start being on the road making major addresses justifying the reasoning for tax reform and why we need it in the US.”
Trump will head to Missouri next week to begin the “major push on tax reform.”
Press Secretary Sarah Huckabee Sanders said that a tax reform announcement could come out next week:
“Tax relief and the focus on tax relief for middle class Americans is a huge priority for this administration and certainly going to be a big focus in the fall. And we’re going to look at a lot of different ways in which to talk about that and present that to the American people, working with Congress to make sure that that happens,” Sanders said.
Over the last couple of months, the White House has released its goals for tax reform. Back in April, Secretary Treasury Steven Mnuchin and Cohn released a one-page outline, which included cutting the corporate tax rate to 15% and forming three tax brackets.
Above all, the mission of the committees is to protect American jobs and make taxes simpler, fairer, and lower for hard-working American families. We have always been in agreement that tax relief for American families should be at the heart of our plan. We also believe there should be a lower tax rate for small businesses so they can compete with larger ones, and lower rates for all American businesses so they can compete with foreign ones. The goal is a plan that reduces tax rates as much as possible, allows unprecedented capital expensing, places a priority on permanence, and creates a system that encourages American companies to bring back jobs and profits trapped overseas. And we are now confident that, without transitioning to a new domestic consumption-based tax system, there is a viable approach for ensuring a level playing field between American and foreign companies and workers, while protecting American jobs and the U.S. tax base.
The biggest thing is that they all agreed to stop supporting the border adjustment tax.DONATE
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