The GOP Tax Plan Is Already Hitting Speed Bumps
By Sahil Kapur
October 3, 2017, 4:00 AM EDT
October 3, 2017, 3:21 PM EDT
Corker questions whether GOP has fortitude for tax overhaul
Republicans split on whether tax plan can add to the deficit
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Tax Plan Is Not a Slam Dunk, Says Credit Suisse's Gage
Tax Plan Is Not a Slam Dunk, Says Credit Suisse's Gage
The White House is showing "softness" on ending a $1.3 trillion federal tax deduction filers get for their state and local taxes, Senator Bob Corker said Monday, warning that it raises questions about the GOP’s "intestinal fortitude" and could imperil a tax overhaul.
The framework that President Donald Trump and Republican leaders released Wednesday calls for deep rate cuts and would abolish existing tax breaks to help pay for them. Without such “
ay-fors,” Congress might have to settle for only temporary tax cuts.
Bob CorkerPhotographer: Zach Gibson/Bloomberg
Corker, who insists he won’t vote for a tax bill that adds a penny to the deficit, said in an interview that he’s concerned about the early signals from the White House. On Friday -- two days after the tax framework was rolled out -- National Economic Council Director Gary Cohn said that ending the state and local tax break was negotiable.
“That’s the easiest one,” said Corker, a Tennessee Republican. “Some of the others are actually more offensive and produce lesser amounts of money.”
The budget rules that Senate leaders plan to use to pass the legislation require that any changes that boost the federal deficit would have to expire in time. But the nine-page framework released Wednesday provided few details on revenue raisers. It calls for eliminating deductions, but doesn’t specify them. By showing its willingness to negotiate on one such deduction, the White House appears to be charting a rocky path.
“As a general matter in tax reform you have to acknowledge that you cannot negotiate with everybody’s single pay-for,” said Doug Holtz-Eakin, who runs the American Action Forum, a conservative group that’s working with GOP leaders on taxes. “If you do that for everything, you don’t get tax reform.”
‘New Deficits’
Ending the state and local deduction, which Trump’s aides proposed in April, faces resistance from Republican lawmakers in high-tax states like New York and New Jersey.
The same day Cohn commented on the state tax break, tax-writing chiefs Senator Orrin Hatch and Representative Kevin Brady dismissed a study that found ending personal exemptions, another one of the few offsets set forth, could raise taxes for some middle-class families. Their response: The committees haven’t made decisions about which tax breaks to end.
Asked if the state tax break and personal exemptions were negotiable, Brady reiterated Monday the bill is a work-in-progress. "We’re continuing to work on the final design of the tax reform plan that we’ll have ready after the budget is completed,” he said.
White House Budget Director Mick Mulvaney is signaling similar flexibility, saying on CNN Sunday that decisions about deductions remain up in the air as “the bill is not finished yet.” He took it a step further on Fox News Sunday, by adding that a tax plan that doesn’t add to the deficit won’t spur growth.
“I’ve been very candid about this. We need to have new deficits because of that. We need to have the growth,” Mulvaney said. “If we simply look at this as being deficit-neutral, you’re never going to get the type of tax reform and tax reductions that you need to get to sustain 3 percent economic growth.”
