Republicans struggle to unite around tax plan
House Republicans this week hammered out the final details of their long-awaited tax reform bill, as tense, round-the-clock negotiations forced the caucus to push back a self-imposed deadline for unveiling the sprawling legislation. Republican tax writers were still haggling over some of the bill’s most contentious details as The Week went to press. The key question confronting lawmakers: how to pay for more than $5 trillion in proposed tax cuts over the next decade—including $2 trillion in corporate tax cuts—when the House budget only allows for $1.5 trillion in lower tax receipts.
To make up for lost revenue, lawmakers have proposed eliminating a host of tax breaks, including deductions for state and local taxes. Faced with an outcry from Republicans in high-tax states such as New Jersey and California, the plan is expected to retain the deduction for local property taxes. Other proposals include lowering the cap on tax-free 401(k) contributions from $18,000 annually to as low as $2,400. Republicans have made other compromises to make the bill more politically palatable, including keeping the top individual income tax rate at 39.6 percent but raising the income threshold to $1 million and phasing in the elimination of the estate tax.
What the columnists said
“The GOP’s tax reform effort is already on the ropes—and the first round hasn’t even started yet,” said Jeff Spross in TheWeek.com. To make their plan work, Republicans need to eliminate $3.5 trillion worth of “deductions, breaks, and other carve-outs” in the tax code—each with its own devoted constituency that will fight to keep it there. And since GOP lawmakers “have decided they don’t want the Democrats involved at all,” they have far less room to maneuver in their quest to get the bill to Trump’s desk. “It’s not at all obvious how Republicans are going to make both the politics and the budget math work in tandem.”
Republicans hope to have a tax bill signed by Christmas. They should shoot for Thanksgiving, said Deroy Murdock in National Review.com. The longer tax reform languishes, the longer lobbyists and lawmakers “will have to nitpick this legislation to death.” It’s unclear “whether Trump will be a reliable asset to sell the plan to wary Republicans,” said Michael Warren in WeeklyStandard.com. The president has already publicly rejected politically unpopular trade-offs like limiting 401(k) contributions. Trump and GOP lawmakers are united in their enthusiasm to cut taxes, but that “won’t be enough to do the political heavy lifting.”
Republicans know they have to pass a bill, any bill, said Josh Barro in BusinessInsider.com. But just like on health care, “they’ve overpromised.” They’ve pledged huge tax cuts for corporations, the middle class, and the wealthy while only increasing the deficit by $1.5 trillion—“an impossible combination.” They’ll have to settle for less. One option is to pass a $1.5 trillion tax cut that reduces taxes slightly across the board. It wouldn’t be the “massive, huge, luxurious, classy reductions in tax rates that Trump wants to brag about.” But at least it would be something. ■