- The Washington Times - Wednesday, September 27, 2017

INDIANAPOLIS — Republicans outlined a once-in-a-generation tax overhaul Wednesday that would slash rates, boost businesses and double the amount of tax-free income everyone can pocket — a move that is likely to leave many more Americans owing no income tax at all.

President Trump, who traveled to Indiana to reveal the plan to the heartland, called it “revolutionary change” for businesses and for individual taxpayers. He said all sides can emerge victorious from a long-overdue reform.

“We will dramatically cut the business tax rate so that American companies and American workers can beat our foreign competitors and start winning again,” Mr. Trump said. “The biggest winners will be middle-class workers as jobs start pouring into our country, as companies start competing for American labor and as wages continue to grow.”

The president said tax reform hasn’t been a partisan issue in Washington in the past and shouldn’t be divisive this time either. He insisted that he is focused on making sure the middle class — not the “wealthy and well-connected” — emerges with the best deal.

“They can call me all they want, and it’s not going to help,” he said. “And it’s not good for me, believe me.”

As the president announced the plan in the Midwest, Republicans in Washington were presenting a united front in what they hope will be a legislative sprint toward passage this year.

The framework calls for cutting the corporate tax rate from 35 percent to 20 percent. The rate for small businesses that file as pass-through corporations would go from as much as 43.4 percent down to 25 percent.

The plan also compresses the existing seven income tax brackets to three. The top tax rate would come down from 39.6 percent to 35 percent, and the other rates would be 25 percent and 12 percent.

That lowest rate is higher than the existing 10 percent rate, but Republicans said many who pay that low rate will owe nothing at all under their plan, and those who do end up with the 12 percent rate will still probably get tax cuts because of other breaks.

“The tax elevator goes down at every level, and that’s why at the end of the day — especially the poor and especially the middle class — will be better off,” said House Ways and Means Committee Chairman Kevin Brady, Texas Republican.

The biggest change for lower-income Americans is the doubling of the standard deduction to $12,000 for individuals and $24,000 for married couples filing jointly.

The nine-page framework still leaves plenty of details to be worked out in Congress.

“This is just a start,” said Rep. Charles W. Dent, Pennsylvania Republican. “We all agree that we’d like to see rates come down. It’s a matter of how we do it. This is the start. I’m not hyperventilating at this point.”

The House Freedom Caucus, an influential group of about three dozen conservatives, gave the plan an early blessing.

“I can tell you they checked off all of my must-haves,” said Rep. Mark Meadows, North Carolina Republican and chairman of the caucus.

The framework leaves room for Congress to add a fourth rate at the top for the wealthiest Americans, who could see a tax increase if lawmakers go that route. But leading conservatives ruled that out.

“It’s not happening,” said Grover Norquist, president of Americans for Tax Reform. “The argument that any Democrat would vote for a bill if it had a higher top rate or something, I think is unlikely.”

Indeed, top Democrats in Congress almost immediately rejected the plan as a giveaway for the rich.

Senate Minority Leader Charles E. Schumer, New York Democrat, said Republicans are looking to explode deficits, then use the sea of red ink to argue for the need to cut other government programs — the “starve-the-beast” theory some Republicans advocated in the Reagan and Bush administrations.

“This is all part of the hard-right agenda,” said Mr. Schumer. “Cut taxes for the rich, blow up the deficit, decimate Medicare and Social Security.”

Indeed, Democrats who earlier signaled that they would be open to working with Republicans on a tax reform gave the proposal poor reviews.

“After today’s announcement, it is clear that President Trump and congressional Republicans have no interest in real bipartisan reform that will help everyday Americans,” said Rep. Tim Ryan, the Ohio Democrat who challenged House Minority Leader Nancy Pelosi for the party’s leadership post and frequently says Democrats have become ensnared in identity politics and need to appeal more to the broad middle and working classes.

“Instead, their tax plan demonstrates that they are only interested in creating a tax structure that benefits themselves and their wealthy donors,” he said.

Democrats particularly decried provisions that would eliminate the estate tax, which applies to settling inheritances of mostly wealthy individuals. Another pro-business provision would let businesses immediately write off expenses for equipment and building purchases for at least five years.

The framework also calls for moving to a “territorial” tax system by reducing the tax burden companies pay on their overseas profits and imposing a one-time surcharge for money that corporations have parked overseas for tax purposes in an effort to bring the money back to the U.S. economy.

Budget watchdogs blasted the Republican plan, saying that with the government’s total debt now topping $20 trillion, a tax overhaul that could total more than $2 trillion in additional debt is unwise.

The Committee for a Responsible Federal Budget said the overhaul calls for about $5.8 trillion in tax cuts, offset by $3.6 trillion in new revenue from a broader tax base — leaving an additional deficit of $2.2 trillion.

Without Democrats’ support, Republicans will have to harness the 2018 budget process to avoid a filibuster in the Senate.

They are long overdue for writing a budget but had been waiting for final action on an Obamacare repeal, which was the crux of the 2017 budget. With the repeal effort sputtering in the Senate once again this week, Republicans say they need to rack up a win this year on tax reform.

Mr. Brady said this week that his committee, where tax bills traditionally start, won’t release real legislation until both Houses finish the budget process.

The House could vote on a budget as soon as next week. Sen. John Cornyn of Texas, the No. 2-ranking Republican in the Senate, said he expects the upper chamber to put a budget through the committee process next week.

A breakthrough came in recent weeks when lawmakers reached an agreement that clears the way for the tax overhaul to deepen the deficit by $1.5 trillion over 10 years.

Even in the wake of the Obamacare repeal debacle, which Republicans spent most of the year on with nothing to show for it, officials still say they plan to keep the “aggressive” timetable of passing tax reform by year’s end.

“I think in October, you’ll see more focus on getting the budget passed in the House and the Senate,” Marc Short, the White House director of legislative affairs, told radio host Hugh Hewitt on Wednesday. “You’ll probably see the House, if all goes well, in early November, and the Senate in late November, and hopefully completing it before the end of the year.”

Dave Boyer contributed to this article.

• S.A. Miller can be reached at smiller@washingtontimes.com.

• David Sherfinski can be reached at dsherfinski@washingtontimes.com.

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