Congressional GOP put on notice if it fails to cut taxes

  • 3 October 2017
  • NormanL
Congressional GOP put on notice if it fails to cut taxes

The Trump administration is about to launch its big push for a sweeping federal tax overhaul. In an interview with CNBC, the Tax Foundation's Scott Hodge called the bundle of cuts and reforms, "a real step in the right direction."

The tax overhaul promises a simpler tax code. For individual taxpayers, the current seven income tax brackets would be reduced to just three: 35 percent, 25 percent and 12 percent.

However, another "bracket" is zero percent, which represents those who don't pay any income tax at all. The standard deduction will double to $12,000 for single taxpayers and $24,000 for married couples filing jointly.

Hodge predicted those folks will come out ahead under the new plan. "At the bottom end, they're going to make some big changes. They're increasing the standard deduction, the 'zero bracket' if you will, so that a couple won't pay any income taxes up to $24,000 a year. That's great."

But while establishing fewer income brackets, the plan is proposing the removal of nearly all itemized deductions, except those for mortgage interest and for charitable donation deductions.

"That's the real balance here, is how far we can reduce tax rates to make up for some of the deductions that we're going to lose," Hodge said.

Another major provision of the GOP tax reform plan is the elimination of deductions for state and local taxes – a change that could hit middle and upper-income taxpayers.

It is an open question as to whether Congress will agree with any of the ideas tucked into the package. As with any such legislation, interest groups will line up to protect their part of the tax code from any changes. In short, things could get ugly before a final bill reaches either the House or Senate floor.

But the White House is counting on a win -- and some inside the West Wing are calling for strong measures should the GOP Congress fail to deliver on taxes, as it has failed, twice, on Obamacare repeal.

Nick Ayers, chief of staff to Vice President Mike Pence, is reported to have called on major donors to GOP incumbents to withhold their contributions -- and put their resources behind GOP challengers --  should Congress drop the ball on tax reform:

In remarks at a Republican National Committee event at the St. Regis Hotel in Washington on Tuesday morning, Nick Ayers also warned that Republicans are “on track to get shellacked” in next year’s midterm elections if GOP lawmakers don’t pass Trump’s legislative priorities.

But Ayers reserved his harshest criticism for congressional leaders and members who have not offered full-throated support for the president.

“Just imagine the possibilities of what can happen if our entire party unifies behind him? If — and this sounds crass — we can purge the handful of people who continue to work to defeat him,” Ayers said, according to an audio recording of the remarks obtained by POLITICO.

One attendee later asked how the donors could “rally the congressional delegation that does support the president and vice president, and rally them and push them to change the current leadership in both the Senate and the House.”

“I’m not speaking on behalf of the president or vice president when I say this,” Ayers responded. “But if I were you, I would not only stop donating, I would form a coalition of all the other major donors, and just say two things. We’re definitely not giving to you, number one. And number two, if you don’t have this done by Dec. 31, we’re going out, we’re recruiting opponents, we’re maxing out to their campaigns, and we’re funding super PACs to defeat all of you.”

He continued, “Because, look, if we’re going to be in the minority again we might as well have a minority who are with us as opposed to the minority who helped us become a minority.”

The crowd laughed and burst into applause.

That's pretty strong stuff. But it gives us a real sense of how much the Trump White House knows the GOP needs to get things done. If not, then the White House may be done with the existing GOP congressional line-up...and openly advocate for primary challengers.

Again, very strong stuff. It would also be something we haven't really seen since Franklin Roosevelt actively campaigned for Democrats loyal to him and his policies in the 1938 congressional elections. That didn't end up so well for Roosevelt, who saw Democrats lose ground to the GOP, and his plans for an expanded New Deal collapse. Trump loyalists may think he can avoid FRD's fate, but it can all be avoided -- if Congress, and congressional Republicans, do what they all know they must do on tax reform.