After the bill to repeal and replace Obamacare was blocked due to conservative infighting, President Trump is reportedly looking for a new path to comprehensive tax reform. Knowing he will have to back legislation that appeals to every wing of the Republican Party if he doesn’t want to rely on moderate Democrats, the president is considering a wide range of options prior to the inevitable congressional battle to come.
The Associated Press reported this week that White House officials say the hope is to cut tax rates enough so that rural and industrial American cities will feel the impact in a big way. At the same time, the administration is trying to avoid making up that revenue through other means, such as the healthcare mandate and carbon fees, both of which are essentially taxes by other names.
According to the report, Trump isn’t crazy about the current plans on the table:
Trump has not said which trade-offs he might accept and had remained noncommittal on the leading blueprint for reform from Rep. Kevin Brady, R-Texas, the chairman of the Ways and Means Committee.
Brady has proposed a border adjustment system, which would eliminate corporate deductions on imports, to raise $1 trillion over 10 years that could fund lower corporate tax rates.
But that possibility has rankled retailers who say it would lead to higher prices and threaten millions of jobs, while some lawmakers have worried that the system would violate World Trade Organization rules.
Brady has said he intends to amend the blueprint but has not spelled out how he would do so.
Trump is also reportedly thinking about another option being bandied about Republicans in Congress. That option would be to gut much of the payroll and corporate tax systems and replace them with a different funding mechanism for Social Security. It would also amend the Brady import plan by removing labor deductions. That option would raise some $12 trillion in additional revenue over the next decade, according to independent budget analyses and could facilitate the removal of the 12.4% payroll tax.
The president (and the rest of the GOP) needs a big legislative win in the wake of the healthcare fiasco, and a smooth, popular tax reform package could seal the deal. Trump was elected for a number of reasons, but there’s no question that his perceived strength on economic matters played a big role. Here’s the chance for him to make good on that perception and cement his status as a great president.
Of course, getting it past House Republicans is one thing. Getting it past the Democrats…that’s another story.