President Trump sets tax-cut test for Republicans

  • President Trump sets tax-cut test for Republicans

President Trump sets tax-cut test for Republicans

President Donald Trump and his allies in Congress are eager to turn our attention to tax changes. It would fit the profile if Trump undermined his own effort to rally support for tax cuts with an ill-timed Twitter fusillade or a fratricidal attack on should-be GOP allies. They rehashed lines they've used since January: They want to simplify the code so Americans can file returns on postcards. "The tax code is now a source of frustration for tens of millions Americans".

This event is closed to the public - only employees and the media will be allowed inside. Kevin Brady of Texas, who chairs the House tax-writing committee, went to AT&T's headquarters in Dallas.

All of this is welcome news as tax reform, especially the kind of reform that positively impacts capital formation, is sorely needed.

That's less than the top 35 percent tax rate that is the target of supporters of corporate tax cuts.

House Speaker Paul Ryan, R-Wis., favored a so-called border adjustment tax on imports as another way to raise revenue and offset the cost of income tax cuts.

How low the new rate would be is also a factor. His speech is laying out his vision for rewriting the tax system for the first time since the mid-1980s. And according to Ben White and Tara Palmeri at Politico, Trump's message will paint the tax reform policy as a populist change created to achieve the goal of "unrigging the economy".

"There will likely be months of committee hearings, lobbying by affected groups, and behind-the-scenes horse trading before final tax legislation emerges", wrote JPMorgan economists Michael Feroli, Jay Barry, and Jesse Edgerton in a note to clients on Tuesday. That research shows that a full and immediate expensing provision would increase after-tax incomes of households by an average of 5.3 percent, compared to a 4 percent gain from cutting the corporate tax rate and 3.6 percent gain from consolidating individual tax brackets.

Earlier in the summer, my colleagues at the Institute on Taxation and Economic Policy analyzed the proposal.

True to form for the president, Trump dangled the prospect of the "biggest ever" tax cut and warned that without it, "jobs in our country can not take off the way they should". For every state, the average tax cut for millionaires would be in the hundreds of thousands of dollars each year. The top 10 job-cutters each spent $45 billion in stock buybacks over the 2008-2015 period, a pace six times that of the S&P 500 corporate average, according to the researchers.

My dad worked on the line at General Motors and my mom most often held a full-time job. This is not just a guess.

There is still a great deal unknown about what type of tax legislation Congress will take up, with negotiations between House and Senate tax-writers and the Trump administration taking place behind closed doors.

After lawmakers return from a recess next week, they must focus first on must-pass bills to keep the federal government open and avert a default on USA debt - most likely pushing serious consideration of tax legislation to October. Our federal government taxes small businesses at a rate that can reach a staggering 44%, including the net investment income tax and levies a rate on larger businesses that is one of the world's most burdensome. Chop out huge sections of the tax code? In that April Gallup survey, 67 percent of Americans said corporations pay "too little" in taxes, while just 9 percent said "too much". "They're both working hard and extremely committed to providing tax relief for middle-class America", she said, The Hill reported.

The two said the media had not treated the president fairly.

During Trump's speech on Wednesday, he also claimed other countries were taking the United States "to the cleaners". "Fool me. You can't get fooled again!'" He had it right, actually.

Alan Essig is the executive director of the Institute on Taxation and Economic Policy.