Trump administration gives tax overhaul plan rosy assessment
WASHINGTON — President Donald Trump on Wednesday will try to sell the American people on an unpopular Republican tax overhaul that his administration claims will generate a large part of $1.8 trillion in new revenue — a figure that a top Democratic lawmaker dismissed as “fake math.”
Trump’s pitch will focus on how the GOP tax reform plan will lead to a brighter future for taxpayers and their families, according to spokeswoman Lindsay Walters. House and Senate negotiators are rushing to finalize a bill and deliver the measure to Trump before Christmas.
Trump and Republican leaders in Congress have promoted the massive tax plan by promising the tax cuts will boost the economy. Their idea is that growth sparked by the legislation will let the tax cuts pay for themselves and not balloon the $20 trillion deficit.
Public polling shows many Americans are unhappy with the proposal. The House and Senate tax bills combine steep tax cuts for corporations with more modest reductions for individuals.
The administration’s rosy estimate of new revenue from the tax plan over 10 years is a lot higher than nonpartisan congressional analysts have projected. The Joint Committee on Taxation estimates that growth stimulated by the anticipated tax cuts will generate some $408 billion in additional tax revenue over 10 years.
The new Treasury Department analysis says about half the expected increase in economic growth likely will result from tax benefits for corporations. Trump and the Republicans have insisted that businesses will use the tax savings to invest and create new jobs.
According to the Treasury analysis, the other half of new revenue will come from tax reductions for individuals and businesses whose profits are reported on owners’ personal income tax returns, as well as from planned administration initiatives such as infrastructure development and a welfare overhaul.
The analysis includes an assumption that tax cuts and other administration policies would cause the economy to expand at a 2.9 percent annual pace over 10 years. Economic growth at that level would, in theory, be enough to keep the national debt from rising.
But most analyses have concluded that the tax overhaul would add at least $1 trillion to budget deficits in the next decade because the analyses foresee significantly less growth resulting from the tax cuts.
Senate Democratic Leader Chuck Schumer called the administration’s analysis “nothing more than one page of fake math.”
“It’s clear the White House and Republicans are grasping at straws to prove the unprovable and garner votes for a bill that nearly every single independent analysis has concluded will blow up the deficit and generate almost no additional economic activity to make up for it,” Schumer said.
The estimates by Treasury and the Joint Committee on Taxation apply specifically to the Senate bill. Underlining the divergent estimates, the congressional tax committee released an analysis of the House bill late Monday projecting sufficient growth to generate $483 billion in new revenue.
Republicans are determined to deliver the first revamp of the nation’s tax code in three decades and prove they can govern after their failure to dismantle Barack Obama’s health care law.
GOP leaders in Congress aim to iron out differences between the $1.5 trillion House and Senate tax bills to pass a final blended package.
Rep. Kevin Brady, who heads the House Ways and Means Committee and is a key leader in the House-Senate compromise discussions, said Monday they were moving toward a vote on the final package next week. Still, key issues appeared to remain unresolved.
“I’m pleased with the progress we’re making,” Brady, R-Texas, told reporters. “We still have work to do.”
The only issue for which Brady noted a firm commitment was repeal of the inheritance tax on multimillion-dollar estates, a benefit for ultra-wealthy Americans. “In the House, we feel very strongly about fully repealing the estate tax,” he said.
House Majority Leader Kevin McCarthy, R-Calif., suggested Sunday that the lawmakers may be open to adopting the Senate bill’s preservation of the current $1 million limit for the mortgage interest deduction rather than reducing it to $500,000 as the House bill does. He also indicated a possible move to fully eliminate the alternative minimum tax, aimed at ensuring that wealthy individuals and corporations pay a fair share of taxes. The Senate bill retains the AMT for corporations.
Brady said, “These are all elements that we’re looking at right now.”
Republican leaders have struggled to placate GOP lawmakers from high-tax states like California, New York and New Jersey whose constituents would be hit hard by the elimination of the prized federal deduction for state and local taxes. Repeal of the deduction added up to $1.3 trillion in revenue over a decade that could be used for deep tax cuts.
Lawmakers finally settled on a compromise in both bills — full repeal of the state and local deductions for income and sales taxes, but homeowners would be able to deduct up to $10,000 in local property taxes.
Associated Press writers Jill Colvin and Josh Boak contributed to this report.