Details missing to say how middle class fares under Trump tax plan
WASHINGTON — The White House struggled Thursday to defend its new tax plan against criticism that it would help the rich at the expense of lower classes, as Republicans in Congress prepared to move ahead with actual legislation.
A day after President Donald Trump unveiled the framework and called it “a miracle for the middle class,” White House economic adviser Gary Cohn said he could not guarantee that all middle-class Americans would see taxes decline.
“I cannot guarantee that. You could find me someone in the country that their taxes may not go down,” Cohn told reporters at a briefing.
Cohn said taxes may not decline for some, “maybe one person,” but insisted the middle class would benefit.
“Our tax plan is aimed at making sure that we give middle class Americans a tax cut,” he said. “That is what we are spending all of our time on doing, and we’ve got lots of tools at our disposal to make sure we do that and that’s what we’re going to do.”
Critics said that glaring omissions from the plan make it hard to tell whether middle-class families would fare better or worse, but they predicted that once the blanks were filled in, the effects were likely to be a modest cut with some winners and losers. People who itemize deductions on their returns and live in high-tax states, for example, may lose a valuable deduction in their state taxes.
“There is simply no chance this proposal is going to deliver a historically large tax cut for middle-income people. It would have to be changed radically for that to happen,” said Howard Gleckman, a senior fellow at the Urban-Brookings Tax Policy Center. “And similarly, when they have said at times this would not be a tax cut for high-income people, they cannot deliver on that, either. This is going to be a very, very big tax cut for the highest income people.”
The Trump plan’s cuts would reduce federal revenues by more than $5 trillion over a decade, analysts say. The United States already is $20 trillion in debt and the Republican plan, while fairly specific on tax cuts, provides few details on how to offset the revenues that would be lost if the plan becomes law.
It calls for cutting the corporate tax rate to 20 from 35 percent, the small business rate to 25 from 39.6 percent and the top individual rate to 35 from 39.6 percent. But the Trump administration did not assign income levels to their proposed tax brackets.
The plan has raised concerns among critics about how it would effect the income gap between rich and poor.
Democrats blasted the plan as a giveaway to the wealthy and businesses, despite Trump’s assurances that the rich would not benefit. Critics have zeroed in on Republican plans to raise the lowest individual tax bracket to 12 from 10 percent.
Representative Kevin Brady, Republican chairman of the tax-writing House Ways and Means Committee, dismissed the criticism as false.
“The 10 percent bracket today goes to zero,” he told a crowd at the Heritage Foundation. “Those of modest income, the poor and middle class, are better off.”
But before they can unveil actual tax legislation, the House and Senate will have to adopt a fiscal year 2018 budget resolution containing a procedural tool called “reconciliation,” which is vital if Republicans intend to move a tax bill through the Senate without Democratic support.
Until this week, the budget resolution drive was embroiled in House Republican infighting. But House Budget Committee Chairman Diane Black told Reuters she expected the measure to be approved by Oct. 5.
“We’re going to absolutely have the votes,” said Black, a Republican.
Lawmakers will face a fight to eliminate $4 trillion in tax deductions, loopholes and other “base broadeners,” including tax breaks that will be defended by interest groups and lobbyists.
Republicans are aiming to have a new tax law signed by January.
The Washington Post contributed to this report.