Republicans gear up to tackle tax reform
Republican lawmakers this week began a frenzied push for tax reform, hoping to fast-track by year’s end what could be the most sweeping tax-code changes since the 1980s. The effort formally began last week, when the Senate narrowly passed a budget resolution for fiscal year 2018. The measure enables Senate Republicans to avoid a filibuster on the coming tax bill, and to pass it with a simple 51-vote majority. Under the budget, the deficit will be permitted to increase by $1.5 trillion over 10 years to pay for tax cuts, but Republicans argue that the revenue shortfall will be more than covered by higher economic growth and future tax receipts.
Early outlines of the GOP tax plan, which is expected next week, have been vague. One change being floated is to cap annual 401(k) contributions at $2,400, down from the current $18,000, though President Trump pushed back on that proposal, tweeting, “There will be NO change to your 401(k).” Other reforms being considered would slash the corporate tax rate from 35 percent to 20 percent, shrink the number of individual income tax brackets from seven to three, and eliminate the state-and-local-tax deduction available to taxpayers in high-tax states such as California, New York, and New Jersey.
What the columnists said
President Trump is already making a difficult task for Republicans even tougher, said Russell Berman in TheAtlantic.com. “Like a game of whack-a-mole, Trump has taken a mallet to one GOP proposal after another,” like the 401(k) “trial balloon” this week and his recent wavering on the state-and-local-tax deduction. The trouble is that “every loophole is someone’s prized and essential tax break.” The bigger problem for Republicans is that their proposed cuts, including to the estate tax and for people earning more than $418,000 a year, mostly benefit “the fabulously wealthy,” said David Horsey in the Los Angeles Times. The result of these generous giveaways to “millionaires and billionaires would be trillions of dollars added to the national debt.”
We should all hope that tax reform succeeds, said Bret Stephens in The New York Times. Cutting taxes will create more economic growth, taking “much of the air” out of Trumpism, which has been fueled by economic anxiety. “If the rich benefit disproportionately, it’s only because they pay a disproportionate share of taxes.” It’s the markets that really need tax reform to pass, said Charles Gasparino in the New York Post. Investors banking on Trump’s promised cuts have sent the stock market soaring in spite of his other high-profile legislative failures. “If tax reform bellyflops the way Obamacare repeal did,” it won’t be pretty.
Republicans are making the same mistake they did with health care—trying to “steamroll” Democrats, said Kevin Williamson in NationalReview.com. Party-line votes designed around arcane reconciliation rules are unsustainable, not least because they assume one party will stay in power forever. Surely Republicans can offer something to bring Democrats to the table. “We’d be better off with a more moderate fiscal package today than with a more ambitious program that falls apart after the next election.”