In a much-promoted speech today, President Trump vowed in Springfield MO that a coming tax bill would “benefit loyal, hard-working Americans and their families” and lead America to “a big, beautiful comeback.” A loyalty test for tax cuts would be…unusual. But Trump said little about what he thought the tax measure should look like.
Trump described only three elements of his plan, all of which have been on his agenda since the campaign: a 15 percent tax rate for business, a tax incentive for US-based multinationals to repatriate foreign income to the US, and some form of subsidy to help “parents afford child care and the cost of raising a family.” The remaining details, he implied, would be left to Congress.
Trump laid out four principles for reform, though some seemed internally inconsistent. The principles are a tax code that is: “simple, fair, and easy to understand… competitive and creates higher wages… produces tax relief for middle-income families.., and brings back trillions in wealth that is parked overseas.”
He vowed it would be “the biggest ever” but said nothing about whether the plan would add to the nation’s debt. The tax plans and outlines Trump has proposed as a candidate and as president all would add trillions of dollars to the debt over 10 years. Nor did he name a single tax preference he’d eliminate, although he said repeatedly that the plan should eliminate “special interest loopholes.”
Yet, by embracing a 15 percent tax rate for pass-through businesses (with no accompanying anti-abuse rules), a new child care subsidy, and a special low rate for unrepatriated foreign income Trump seemed to be endorsing three new provisions that could meet the definition of special interest loopholes.
Trump insisted his plan would favor US exports over imports. Yet, earlier this year, his Administration torpedoed a plan proposed by the House GOP leadership that would have curbed current tax preferences for imports and created tax parity between goods and services produced in the US and those brought in from overseas.
He said a new tax plan would encourage companies to produce in the US with American workers. But in April, his tax outline backed a “territorial” system that would tax domestic profits but exempt goods and service produced overseas from US tax.
Trump seemed determined to place most of the burden for developing a tax plan on Congress. This mimics his failed effort to replace the Affordable Care Act, when he never proposed his own plan and congressional Republicans were unable to agree on one of their own. Yet, Trump included what appeared to be a veiled threat against lawmakers: “I don’t want to be disappointed by Congress," he said, "Do you understand me?"
He also called for bipartisan support for a tax plan, though he larded today’s speech with attacks on congressional Democrats. One target was Missouri Democrat Claire McCaskill, a moderate who is running for reelection in 2018 and might be among the Democrats who could back a truly bipartisan plan.
Without strong political cover from the White House, congressional Republicans will have a tough time passing a tax bill without Democratic support, which still appears to be their goal. It will be especially difficult for them to close specific “special interest loopholes” without backing from Trump or Hill Democrats. Trump today didn’t make their job any easier.
