The White House and GOP leaders plan to reveal new details of their goal of cutting corporate and individual taxes the week of Sept. 25, and they are imploring lawmakers to reach a budget agreement that could smooth its passage.
House Ways and Means Committee Chairman Kevin Brady (R-Tex.) told other House Republicans during a closed-door meeting Wednesday that they needed to unify or the effort to cut taxes could fail, according to two people in the room. The announcement is part of a GOP leadership effort to create momentum and excitement for an eventual tax overhaul and assuage skeptical conservatives who have grown frustrated that details of the plan remain closely guarded by leaders.
Brady told his colleagues that “the stakes are higher than ever that we deliver this year.” But members emerged from the meeting saying they had little idea what specific tax changes leaders would be asking them to support.
“I don’t have any details,” said House Freedom Caucus Chairman Mark Meadows (R-N.C.). “I don’t understand why there are no details, especially since our leadership said we would have details on tax reform months ago.”
Earlier in the morning, House Speaker Paul D. Ryan (R-Wis.) left open the possibility that the tax plan would cut government revenue — adding to the government’s budget deficit but potentially averting the need to make tough choices that could leave the legislation tangled in a political thicket.
“We want pro-growth tax reform that will get the economy growing, that will get people back to work, that will give middle-income taxpayers a tax cut and that will put American businesses in a better competitive playing field so that we keep American businesses in America,” Ryan said at an event hosted by the Associated Press. “That is more important than anything else.”
Ryan, who had spent years blasting Washington policymakers for not doing enough to tackle the deficit and the debt, had earlier pledged a “revenue-neutral” tax bill — one that did not change the amount of anticipated federal income. But the failure of the GOP health-care legislation, which included a nearly $1 trillion revenue cut, has scrambled party leaders’ plans.
Ryan spokeswoman AshLee Strong said the speaker’s statement did not represent a change in his position.
“We intend to pursue a permanent tax reform plan that abides by the reconciliation rules,” Strong said in an email.
President Trump added to the confusion about what the plan will include when he told reporters at a bipartisan tax meeting at the White House later in the day that wealthy Americans could see a tax increase.
“I think the wealthy will be pretty much where they are,” Trump said before a meeting with Democrats at the White House about the tax-cut effort. “Pretty much where they are . . . If they have to go higher, they’ll go higher.”
Trump’s characterization of the tax-cut effort was at odds with a description of the plan given a day earlier by Treasury Secretary Steven Mnuchin, who predicted that many wealthy Americans would get a tax cut. The only wealthy Americans whose taxes would remain flat would be those living in states such as New York and California, Mnuchin said.
The conflicting statements have made it difficult for lawmakers to predict what might fill in the gaps left by a one-page tax blueprint that the White House released in April. That outline included slashing the corporate tax rate, simplifying the tax brackets that individuals and families face, and eliminating the estate tax and alternative minimum tax, among other things.
In recent weeks, Trump has referred publicly to “tax cuts” rather than the “tax reform” Ryan and Brady have discussed. In Wednesday morning tweets, Trump promised “the biggest Tax Cut & Tax Reform package in the history of our country” and urged Congress to move fast.
After the morning House GOP meeting, Brady said that GOP leaders are working with Trump and the White House on the tax bill. Some details will be included in the template set to be released later this month, but the text of the legislation will ultimately be crafted by the House Ways and Means Committee.
“The House will begin with the bill, and we will continue to have work to do after the framework is laid out,” Brady told reporters. “The president is all in on this, and not just tax cuts, because that gives us a temporary stimulus, but redesigning the code so we can compete and win anywhere in the world.”
So far, the White House and GOP negotiators have areas of overlap but also areas of disagreement in their tax-cut approach.
They all want to cut tax rates and simplify the tax code, but they have not agreed on how much. Republican leaders have dismissed concerns about the lack of information, saying that the tax discussion is still in the early stages and that details will be worked out by the relevant committees.
“It’s the beginning of a very important process to achieve, for the first time in a generation, overhauling our tax system and giving middle-class families a much-deserved break,” Ryan told reporters after the GOP meeting Wednesday. “The House, the Senate and the White House are starting from the same page and the same outline, and then the tax writers are going to take it from there on the details.”
Trump has proposed lowering the corporate tax rate from 35 percent to 15 percent, while House GOP leaders believe a rate in the low to mid-20s is more politically viable. They are also debating whether to make the tax cuts retroactive so that they affect all income earned in 2017, or whether to make the changes prospective, affecting income earned in 2018 and beyond. They also haven’t agreed on what proportion of the changes should be temporary or permanent. Trump has promised the biggest tax cut in U.S. history.
But legislators have not said what tax breaks they plan to eliminate to offset the revenue lost from steep tax-rate cuts, which some economists have said could reduce government receipts by more than $5 trillion over 10 years.
Brady also reminded members that House and Senate budget writers will need to reach an agreement in mid-October on budget levels for 2018 to ease the path to passing an eventual tax bill. They need to pass matching budget resolutions to trigger a process called “reconciliation,” which allows them to pass changes to the tax code through a simple majority in the Senate.
Republicans hold 52 of the Senate’s 100 seats, and if they don’t have matching budget resolutions, they would need 60 votes in the Senate to pass a new tax plan.
Many conservatives, however, have been unwilling to sign off on a budget until they see the full details of the tax proposal. Opponents of the budget plan say they went along with GOP leaders’ pleas this year that they had to pass a bare-bones budget to pave the way for repealing and replacing the Affordable Care Act. Conservatives went along, only to see leaders struggle and fail to follow through on that promise.
Rep. Dave Brat (R-Va.) was among those who said he is not willing to vote for a budget that could lead to another failure, this time on tax policy.
“We opened the budget gate for that to happen,” Brat said. “You get burned once. Second time around: Nope, put it in writing.”