WASHINGTON — House Republicans will unveil their tax reform proposal next week, finally revealing the winners and losers of the sweeping plan to reshape the tax code they’ve vowed to pass before the end of the year.
The plan has been wrapped in secrecy, with Republicans disclosing only that they will attempt to lower income tax rates for every American and pay for them through closing unspecified loopholes. The proposal also is expected to substantially lower taxes on corporations. GOP leadership and President Trump have stressed repeatedly that the reforms will primarily benefit the middle class, but they’ve refused to define what income range constitutes a middle-class family.
“It is difficult to just pick numbers for that,” House Ways and Means Chairman Kevin Brady said earlier this week, citing the variations in the cost of living in different states.
Republicans also haven’t said whether the plan will have a fourth, higher tax bracket for wealthier Americans, or how they plan to meet the concerns of Republican lawmakers from high-tax states like New York and California, whose constituents would be harmed by eliminating the federal tax deduction for state and local taxes. The House barely passed a budget Thursday afternoon that paved the way for tax reform, as 20 Republicans defected, mostly over the state and local tax issue.
“I don’t think my district should be subsidizing the rest of the country to get a tax cut,” Rep. Peter King, R-N.Y., one of the Republicans who voted against the budget, told Yahoo News this week.
King’s district swung from supporting President Barack Obama in 2012 to Trump last year. “The people who voted him are the people who are going to get murdered on this,” King said.
Brady said he is working on a compromise on the state and local tax issue.
The tax reform proposal has been kept so secret that even some Republican members of the tax-writing House Ways and Means Committee say they do not know its details.
“The problem is that Ways and Means has somewhat been kept out of the loop with details,” Rep. Jim Renacci, R-Ohio, told Bloomberg. (Renacci is a member of the committee.) “There are still a lot of hurdles to get it done.”
Some senators have also noted that President Trump has not been clear about what he wants on tax reform, prompting fears he could criticize the plan once it’s released.
“There were no details about anything, really, from my perspective,” Sen. Bob Corker, R-Tenn., said of the president’s meeting with Republican senators Tuesday.
Trump disparaged the House’s Obamacare repeal bill as “mean” after lawmakers passed it last spring, scrambling efforts by senators to write their own bill. Ryan joked in a press conference Thursday that he wasn’t worried the president would pan the tax plan on Twitter — because Trump will be in Asia next week.
Given the plan’s details have been held closely among a small group of lawmakers, Republicans will face a barrage of feedback from constituents and from special interests once it’s released. Negative reactions from constituents could spook them and set back the timeline.
“Right now, they’re trying to include a lot of things that politically just are not going to fly,” Alex Conant, a GOP consultant with Firehouse Strategies, told Yahoo News. “When members see how unpopular some of these provisions are — especially the 401(k) changes or the huge corporate tax cuts — it’s going to give them pause.”
President Donald Trump has warned that he would not support changing the amount of money Americans can contribute tax free each year to their 401(k) retirement accounts. That tax break “works,” he has said. But House Speaker Paul Ryan and Ways and Means Chairman Kevin Brady both refused to rule out the possibility that they will attempt to change the 401(k) rules.
There will be NO change to your 401(k). This has always been a great and popular middle class tax break that works, and it stays!
— Donald J. Trump (@realDonaldTrump) October 23, 2017
Polling has also shown that cutting taxes for corporations and for wealthy Americans is broadly unpopular, while middle-class taxes are popular. Trump has said repeatedly in speeches about tax reform that he doesn’t want the plan to benefit wealthy people like him, but the White House’s own blueprint for reform appears to favor the rich.
Many GOP lawmakers also say it’s important to give a cut to all Americans, including the richest among them.
“I don’t think we ought to demonize the wealthy,” said Sen. John Kennedy, R-La. “The America I was raised in treated people who were successful financially as role models, not as devils.”
Despite the many remaining issues, Republicans are united on one thing — that they must pass tax reform if they want to have a shot at holding onto their legislative majorities next year.
“Failure is not an option,” said Rep. Steve Scalise, R-La.
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