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Republicans to unveil broad tax cuts Wednesday, put off tough decisions

President Donald Trump speaks during a news conference with Spanish Prime Minister Mariano Rajoy in the Rose Garden of the White House, Tuesday, Sept. 26, 2017, in Washington. [Alex Brandon | Associated Press]
President Donald Trump speaks during a news conference with Spanish Prime Minister Mariano Rajoy in the Rose Garden of the White House, Tuesday, Sept. 26, 2017, in Washington. [Alex Brandon | Associated Press]
Published Sep. 26, 2017

President Donald Trump and top Republicans will promise a package of sweeping tax cuts for companies and individuals, the Washington Post reports, but the GOP leaders will stop short of labeling many of the tax breaks they hope to strip away, putting off controversial decisions that threaten to sink the party's tax effort.

Republicans' "unified" framework, which they will release and promote Wednesday during speeches and meetings, aims to cut taxes by more than $5 trillion over 10 years and recoup more than half of that lost revenue by eliminating numerous tax breaks.

By refusing to specify on Wednesday which tax breaks could be jettisoned, GOP leaders make a calculated effort to try to postpone any backlash while they try to build a coalition.

They already spent months tangling over whether to raise taxes on imported goods, and lobbying groups often move swiftly to try to torpedo bills that threaten favored deductions.

Wednesday's push comes as Republicans renew their tax cut effort with a sense of political desperation, furious that repeated attempts to repeal the Affordable Care Act have collapsed in the Senate.

But the fresh wounds from the latest failed Senate health care effort threaten to undermine the tax push as well, with some key lawmakers saying they should attach health care changes to the tax plan as a way to ensure both eventually become law. Senate GOP leaders are trying to quash that effort, worried it could doom the tax cut initiative and leave the party with nothing to show for its majority rule heading into the 2018 midterm elections.

After more than eight months of negotiating, the White House and GOP leaders have agreed on several targets for the tax cuts.

"I see us as having the opportunity to fulfill our constitutional role of writing tax reform," House Ways and Means Committee Chairman Kevin Brady, R-Texas, said.

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They will propose slashing the corporate tax rate from 35 percent to 20 percent and call for lowering the rate many high-income businesses pay through the individual income tax code to 25 percent. The plan is expected to include other incentives meant to spur companies to invest and spend money immediately.

In addition, they will call for lowering the top tax bracket for individuals and families from the current 39.6 percent to 35 percent, but they will also ask lawmakers to find a way to limit the overall benefit the very wealthy would receive. This could include charging them a higher tax rate, but, as with many other areas, no final decisions have been made.

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These proposals will be targets, not set-in-stone demands. Lawmakers are expected to debate and negotiate changes, leaving the figures open to multiple changes.

They will also propose nearly doubling the standard deduction, which allows people to lower their taxable income without specifying things like charitable contributions or the interest paid on their mortgages.

They will propose expanding the child tax credit, which Democrats and Republicans have favored as a way to help working families. The GOP plan will additionally call for eliminating the estate tax, which wealthy families must pay to transfer assets after someone dies.

All of these things would help people lower their taxes, an attractive offer to many Americans looking to boost their disposable income. But the GOP plan will largely stop short of wading into the hardest part of the tax code, which is eliminating tax breaks that businesses and families use to lower their taxes. They want Congress to debate those changes and make them later in the process.

Tax proposals from past White House teams, led by both Republicans and Democrats, have included hundreds of pages of details and line-items, specifying which precise tax breaks should be eliminated and how much it would cost to add a new benefit.

The primary tax break that the White House and Republican leaders aim to target on Wednesday are the state and local taxes that families and businesses pay to lower their taxable income. Eliminating this provision would have an outsized impact on states with relatively high tax rates — such as New York, California, Illinois, and New Jersey — and it could, according to some estimates, raise $1.5 trillion in taxes over 10 years.

Lawmakers from those states are expected to fight vigorously to block the change, but the White House has so far refused to budge.

The White House wants to push all of the tax cuts through Congress by the end of the year, hoping it will lead to a jolt of economic growth, new hiring and better wages. Democrats have warned, though, that the outlines of the GOP tax plan so far would disproportionately help the wealthy, and many have said they will try to block tax cuts that add to the deficit or benefit the top 1 percent of households.

"Despite repeated claims of 'no tax cuts for the rich,' this plan does the opposite by cutting the top tax rate and eliminating the estate tax," Rep. Lloyd Doggett, D-Texas, said Tuesday after meeting in the White House with Trump.

To blunt this, Republicans are looking at ways to prevent the wealthy from drastically cutting their taxes through the plan, though precise details of this effort couldn't be learned.

Trump has repeatedly tried to pitch the tax changes as a way to benefit the middle class, trying to tap into public sentiment that the tax system disproportionately helps upper-income families.

More than 7 in 10 adults say the nation's tax system already tends to favor the wealthy more than the middle class, with a 55 percent majority who feel this "strongly," according to a Washington Post-ABC News poll released Tuesday.

Of those polled, 51 percent said they expect Trump's tax plan will disproportionately benefit wealthy Americans.


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