Trump says tax plan will be boon for businesses, individuals

WASHINGTON — His hopes of repealing Obamacare dashed, President Donald Trump prepared for Wednesday’s rollout of the GOP tax reform plan, promising to deliver “a very, very powerful document” that would slash taxes for individuals and businesses alike.

“We will cut taxes tremendously for the middle class,” Trump told members of the House Ways and Means Committee of the proposal he planned to unveil in Indianapolis.

In addition to doubling the standard deduction, the president promised simplified return filing, a lower corporate tax rate that would encourage job growth and a policy change that would return up to $3 trillion in corporate profits to the United States.

While preparing to move on, Trump mourned the failure of another GOP effort to repeal the Affordable Care Act, also known as Obamacare.

Hours before Senate Majority Leader Mitch McConnell announced there would be no vote on the Graham-Cassidy health care bill this week, effectively killing it, Trump told a reporter that he was “disappointed in certain so-called Republicans.” McConnell pulled the bill after three GOP senators — John McCain of Arizona, Ron Paul of Kentucky and Susan Collins of Maine — announced they would oppose the measure, depriving sponsors of the 50 GOP votes needed to pass.

Provisions floated

The administration declined to release details on the tax package ahead of Wednesday’s announcement, but certain provisions have been floated before the media.

In April, for instance, the White House signaled its support for a reduction of the top income tax bracket from 39.6 percent to 35 percent.

The administration also frequently has discussed the attractiveness of reducing the number of tax brackets from seven to three. Treasury Secretary Steven Mnuchin has boasted that under the Trump plan, most Americans “should be able to do their taxes on a large postcard.”

Axios quoted five senior Republicans on Tuesday as saying that the GOP package would raise the tax rate of the lowest bracket from 10 percent to 12 percent — but working families would not feel a pinch because the package would double the standard income tax deduction.

“Overall the trade ends up being a slight tax cut for low-income taxpayers because the standard deduction outweighs” the 2 percent hike, Kyle Pomerleau of the D.C.-based Tax Foundation said of the proposal.

Trump has been highly vocal about his determination to slash the corporate tax rate from 35 percent to 15 percent, even though many fiscal conservatives are pushing for a rate of 20 percent or higher to avoid adding to the deficit.

In April the administration released a one-page blueprint that promised to pay for lower tax rates by closing tax loopholes. Republicans also want to eliminate the estate tax, also known as the “death tax,” and the alternative minimum tax.

Senate and House Republicans agreed on a deal that could reduce revenue by $1.5 trillion over the next decade while adding to the federal deficit. Earlier this month the gross national debt exceeded $20 trillion for the first time.

Cuts likely to outweigh growth

While supporters argue that lower tax rates will create jobs, Maya MacGuineas of the Center for a Responsible Federal Budget warned that they won’t balance out.

“Smart tax cuts do grow the economy, but not by nearly enough to pay for themselves,” she wrote.

“I think tax reform is always going to be very difficult, and it’s going to be a tax cut, because that’s the only thing they can agree on,” predicted Henry Olsen, author of “The Working Class Republican: Ronald Reagan and the Return of Blue-Collar Conservatism.”

Trump plans to roll out the blueprint in Indiana, where he plucked Mike Pence from the governor’s office to become his vice president. His remarks at the Indiana State Fairgrounds are likely to be light on specifics.

Contact Debra J. Saunders at dsaunders@reviewjournal.com or at 202-662-7391. Follow @DebraJSaunders on Twitter.