“What do we want? Tax Reform! When do we want it? December 31!” President Trump heads to Missouri this week—the first stop on a tour designed to boost public support for a tax bill. The White House expects Republican lawmakers to hash out the details of tax legislation—but more successfully than they did for the failed effort to repeal and replace the Affordable Care Act. National Economic Council Director Gary Cohn remains hopeful that tax reform will be completed by the end of the year. Not so long ago, some in the Administration were predicting Congress would pass a tax bill by August.
But stuff keeps happening. Cohn, one of Trump’s top tax negotiators, publicly ripped the president (at least indirectly) for his post-Charlottesville remarks. How will this affect his standing in the White House and his ability to work out details of a tax plan? Meanwhile, Ways & Means Committee Chair Kevin Brady, who represents the Houston area, may be more focused on massive flooding than tax rates for at least the next several weeks. And the aftermath of Hurricane Harvey is likely to distract the public from whatever Trump says about taxes this week.
Between a wall and a hard place… TPC’s Howard Gleckman considers Trump’s desire for a border wall. The president “is going to have to decide, very soon, how he wants the fall policy debate to play out. Does he want Congress to spend the next few months battling over… funding a border wall? Or does he want lawmakers to try to pass a tax cut? If he does not develop and sell a coherent policy choice to Congress…it is likely that the congressional GOP leadership will choose for him.”
And “the [GOP] wants what it wants.” House Speaker Paul Ryan told CNBC that “We very passionately believe that permanence is very, very important. So the big decision-making provisions in the tax code? That stuff’s got to be permanent.” He also said the GOP plans to retain the mortgage interest deduction. How will President Trump and the congressional GOP pay for significant rate cuts and other items on their wish lists?
There’s a way to lower the business tax rate to 15 percent without breaking the bank. TPC’s Howard Gleckman describes the six key elements of a tax plan designed by colleague Jim Nunns. It includes many key aspects of Trump’s April outline, the House Republican leadership’s 2016 blueprint, and Senate Finance Committee Chair Orrin Hatch’s push to end double-taxation of dividends, but makes the package revenue-, distributionally-, and economically-neutral. “It would not be easy and would require some difficult decisions about corporate and individual income taxes, payroll taxes, and adoption of a business-level consumption tax.”
No matter what Congress does, it should start with fundamentals. TPC’s Gene Steuerle offers a reminder of a key lesson from the Tax Reform Act of 1986. Its success “was built on a…set of fundamental principles accepted by conservatives and liberals alike. They included equal justice for those in equal circumstances, simplicity, and–to a large extent–efficiency.”
When you tax tanning, do people choose to remain pale? TPC’s Howard Gleckman asks whether the Affordable Care Act’s 10 percent tanning excise tax reduced demand for indoor tanning. As ever when it comes to tax policy, it’s complicated: Not only did the government tax indoor tanning, but the Food and Drug Administration blocked the industry from claiming health benefits from tanning beds while the US Surgeon General and the Centers for Disease Control warned of tanning risks. Perhaps all of this made tanning just a little less fashionable—irrespective of its price. Don’t even get Howard started on spray tans….
Save September 7 for TPC’s Tax and Immigration event. One in four Americans are immigrants or children of immigrants. How do they interact with the US tax system? Leading experts will discuss the challenges immigrants face and how current policies and possible changes would affect them. TPC’s Kim Rueben, director of the Urban Institute’s State and Local Finance Initiative, will share results from a National Academies of Science report on the economic and fiscal effects of immigration.
Congress is in recess. The Daily Deduction will resume its regular schedule on Tuesday, September 5, when Congress’ returns after Labor Day.
