Hill Republicans seem fearless on taxes. As President Trump’s relations with Hill Republicans worsen, congressional tax-writers hint they may be willing to ignore at least some White House tax policy wishes. Although the president Tweeted this week that there would be “NO” changes to retirement savings in the tax bill, Ways & Means Chair Kevin Brady and Finance Committee Chair Orrin Hatch say they may ignore Trump’s demand. At an event hosted by The Christian Science Monitor yesterday, Brady said the House tax bill—scheduled for release on November 1—could still change 401(k) plans and other retirement accounts. Faced with the pushback Trump seemed to back off.
As for head of household filing status... Brady also indicated that the House would retain head of household filing status. During his presidential campaign Trump proposed dropping the provision, which benefits single parents. Brady, though, said he was inclined to keep it to avoid tax hikes on lower earners.
Speaker Ryan sees another threat to the GOP tax plan. It’s big, bad, lobbyists. “When the details come, that is when you’re going to see K Street coming to Congress. And that’s why this hasn’t been done for 31 years.” Perhaps, but lobbyists have likely been involved in drafting the bill all along.
Speaking of Ryan and threats… The state and local tax deduction—which if nixed could save $1.3 trillion over ten years—is pretty valuable to Ryan’s own constituents. Bloomberg reports that among the roughly 1,000 returns filed from one upper-crust zip code in Ryan’s district in 2016, the average state and local tax deduction was $10,909, well more than double the national average of $3,691. Meanwhile, 20 Republican congressmen say they won’t vote to accept the Senate budget resolution unless GOP leaders agree to preserve at least part of the SALT deduction.
Then there are pass-throughs. Wisconsin GOP Sen. Ron Johnson weighed in on the debate over the tax treatment of partnerships and other pass-throughs. He said that, to avoid abuse of a new, low tax rate on these entities, the Senate may try to set a formula for allocating pass-through income into higher-taxed labor and lower-tax business earnings. But Johnson rejected the idea: “I'm completely opposed to that… it's horrible.”
And Americans are still not fond of the GOP tax plan. A new Associated Press-NORC poll finds that most Americans think it would benefit the wealthy and corporations. Less than half believe that "massive tax cuts" would help middle-class workers. AP-NORC conducted this poll from October 12th-16th. This survey is consistent with several others taken in recent weeks.
But how would they feel about a gas tax hike? Senior White House economic adviser Gary Cohn floated another trial balloon yesterday: A 7-cent-per gallon increase to the federal gasoline tax to help fund a $1 trillion infrastructure plan. Only one problem: A gas tax hike has been a total non-starter on Capitol Hill for decades.
Tune in on Halloween for IRS Commissioner John Koskinen. TPC will host Koskinen as its Distinguished Speaker on Tuesday, October 31 at 9:30 am. Koskinen will join TPC director Mark Mazur to reflect on Koskinen’s four years at the IRS and address challenges facing tax administration. Register here to attend in person or view the live webcast here.
Senator Ron Wyden will be at TPC on November 7. The Senate Finance Committee’s top Democrat will join TPC Director Mark Mazur to discuss the prospects for a tax bill. Sen. Wyden will be the third participant in TPC’s Distinguished Speaker Series. Register here to attend the event or view the live webcast here on Tuesday, November 7, from 9 to 10 am.
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