President Donald Trump promoted a tax overhaul as essential to boosting economic growth as he huddled Tuesday at the White House with his advisers and the congressional leaders shepherding his push to overhaul the nation’s tax code.

“We’re going to cut taxes,” Trump vowed during a Roosevelt Room meeting with the so-called Big Six tax negotiators—National Economic Council Director Gary Cohn, Treasury Secretary Steven Mnuchin, House Speaker Paul Ryan, Senate Majority Leader Mitch McConnell, and the leaders of the congressional tax-writing committees.

Administration officials said before the meeting that they didn’t expect it to produce any major policy breakthroughs, but instead serve as a kickoff to congressional efforts to flesh out the Big Six’s statement of tax principles released in July. Details of a revamp remain scant, with basic questions like where corporate and individual rates will be set unanswered.

Trump stuck to well-practiced talking points when reporters were invited in for a portion of the meeting, repeating admonitions that the tax code should be “as simple as possible” and that a tax cut would produce “millions of new jobs.”

The president is taking his tax sales pitch on the road, traveling to North Dakota on Wednesday to outline why an overhaul is needed and how it would benefit the middle class. The state, home to Senator Heidi Heitkamp, is the second time in as many weeks that the president has used his travel to needle a vulnerable Democrat facing a tough reelection battle in 2018. Last week, Trump made his first major speech on taxes in Missouri, and said if Democrat Claire McCaskill didn’t support his push, “you have to vote her out of office.”

Tough Decisions

The White House has said that a dramatic cut to the corporate rate is essential to fostering the kind of economic growth Trump promised on the campaign trail. The president has yet to achieve a signature law of his own after the failure of the effort to repeal and replace the Affordable Care Act.

But lawmakers are already facing a jam-packed legislative calendar, including pushes to fund the federal government, increase the nation’s debt-borrowing authority, and pay for recovery efforts in the aftermath of Hurricane Harvey. That agenda got even fuller earlier Tuesday when the president announced his plan to end the Deferred Action for Childhood Arrivals or DACA program, which offers protection to immigrants who came to the country illegally as children. Administration officials say they now want Congress to act on DACA.

Trump is scheduled to meet Wednesday with the bipartisan leadership of both the House and Senate.

Even if lawmakers didn’t face an incredibly busy and politically charged schedule, there remain a series of tough decision to make on a tax overhaul.

Finalized Blueprint

Slashing the rate for corporations and so-called pass-through entities to 15 percent—the goal Trump has set—could cost more than $2 trillion over 10 years. If tax changes are to be permanent, then any cuts have to be accompanied by offsets such as the elimination of loopholes. So far, White House officials and congressional leaders haven’t provided many details about ways to offset cuts, aside from eliminating state and local tax deductions.

Democrats are also likely to object to changes that would benefit the richest taxpayers, with 45 senators signing a letter earlier this year saying they wouldn’t support a bill including tax cuts for the top 1 percent.

Tax policy experts have said the dozen bullet points the White House released in April outlining its principles would undoubtedly mean lower taxes for top earners, while the impact on middle incomes was less clear. The plan calls for cutting the top income-tax rate to 35 percent from 39.6 percent; eliminating the Alternative Minimum Tax, which raises the tax bills of certain taxpayers on the higher side of the income scale; and repealing the estate tax, which applies to individuals with estates worth more than $5.49 million. However, it would also eliminate state and local tax deductions, which tend to benefit high-income filers in Democratic states.

Supporters of the president’s tax push say they expect additional details on the measure to be released soon, although Cohn declined to commit to a precise timetable during an interview with Bloomberg Television last week.

“We’re now working with House Ways and Means Committee and Senate Finance Committee to really finalize what that blueprint will look like,” Cohn said. “That’s going to get released in the next—whatever—weeks or months as those committees get together and finalize all of the details.”

White Paper

The cost of complacency in the service industry

Partner Insights
Sponsor Content From:

Bloomberg News