Speed Reads

Taxes and death

Contrary to Trump tweet, Republicans are far from being 'ahead of schedule' on tax reform

On Sunday evening, President Trump turned to his favorite social media platform to issue an optimistic assessment of the Republican effort to drastically revamp the tax code, presumably along the lines Trump laid out a month ago in a single page of bullet points:

Trump's optimism seems a little misplaced. In reality, The Wall Street Journal's Richard Rubin reports, the GOP's "boldest ideas for changing the nation's tax code are either dead or on political life support, as the Republican effort in Congress to reshape the tax system moves much more slowly than lawmakers and their allies in business had hoped." Rubin explains the basic problem:

Republicans, who control both chambers, are scouring the tax code, searching for ways to offset the deep rate cuts they desire. But their proposals for border adjustment — which would tax imports — and for ending the business interest deduction and making major changes to individual tax breaks for health and retirement have all hit resistance within the party. The only big revenue-raising provision with anything close to Republican consensus is repealing the deduction for state and local taxes, and that idea faces objections from blue-state lawmakers in the party. [The Wall Street Journal]

Taking the border adjustment tax and business interest changes off the table leaves the House GOP plan about $2 trillion in the hole, and "the Trump administration has taken more items off the table," too. Some Republicans are scaling back their lofty ambitions, talking about a temporary tax cut that could pass Senate rules for a simple-majority vote or lowering the corporate tax rate to 25 percent rather than the 20 percent House Republicans envision and the 15 percent Trump has called for.

"Eventually you run out of ways to pay for your promises," says Alan Cole, an economist at the Tax Foundation, which favors lower tax rates. "There aren't any free, obvious sources of money where you can just do the thing and nobody gets mad." You can read more details at The Wall Street Journal.