Wash. D.C. Thefiscaltimes.com
The White House an GOP congressional leaders expect much smoother sailing this fall when they seek to enact a tax cut, which is the centerpiece of their agenda–the first major reform of the federal tax code since 1986, including deep cuts in corporate and individual rates. But there is still the matter of Republicans finally resolving their differences over a controversial border tax proposal favored by Ryan and House Ways and Means Committee Chair Kevin Brady of Texas but vigorously opposed by Trump and treasury Secretary Steven Mnuchin.
And just as the health care debate will ultimately turn on questions of cost and the distributional effects of reducing health care benefits and repealing an array of Obamacare taxes, the fight over tax policy this fall will largely come down to a bare knuckle brawl among special interests to determine economic winners and losers. In the latest independent analysis of Trump’s emerging tax cut plan, the Urban Institute projected that the president’s proposals could reduce federal revenues by as much as $7.8 trillion over the next decade. Much of that would be due to sharp reductions in tax rates and elimination of a slew of long standing, onerous tax measures like the Alternative Minimum Tax.
Trump has floated ideas for offsetting as much as half of his individual and business tax cut plan by closing manh loopholes and eliminating deductions. Even then, however, the Trump tax cut plan would add $3.5 trillion to the federal debt over the coming decade, according to the new Tax Policy Center analysis. Without those revenue raisers to blunt the effect of Trump’s proposed tax cut, nearly all U.S. households would receive a tax reduction that averages about $4,400, according to the new report written by economist Howard Gleckman of the Urban Institute. However, the tax cuts would be “highly regressive”, according to the analysis, with high income people getting far more than those with low or middle incomes.