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Trump barges into tax debate, seeks deeper cut for wealthy

Kevin Brady, R-Texas, chairman of the House Ways and Means Committee, left, calls for a short recess on Thursday to consider an amendment, to the GOP's proposed tax bill.. (AP Photo/J. Scott Applewhite)

Kevin Brady, R-Texas, chairman of the House Ways and Means Committee, left, calls for a short recess on Thursday to consider an amendment, to the GOP’s proposed tax bill.. (AP Photo/J. Scott Applewhite)

By KEVIN FREKING and MARCY GORDON
Associated Press

WASHINGTON (AP) — President Donald Trump on Monday barged into congressional Republicans’ carefully calibrated work on revamping the nation’s tax code, calling for steeper tax reductions for wealthy Americans and pressing to add a contentious health care change to the mix.

An analysis showed, meanwhile, that the Senate version of the legislation would actually increase taxes for some 13.8 million U.S. households earning less than $200,000 a year.

In a tweet, Trump commended GOP leaders for getting the tax-overhaul legislation closer to adoption in recent weeks and said, “Cut top rate to 35% w/all of the rest going to middle income cuts?”

That puts him at odds with both legislation from the House that would leave the top rate at 39.6 percent and a bill from the Senate bill, which would set the top rate at 38.5 percent.

Trump also said, “Now how about ending the unfair & highly unpopular individual mandate in (Obama)care and reducing taxes even further?”

The legislation would steeply reduce corporate taxes, double the standard deduction used by most Americans, and limit or repeal completely the federal deduction for state and local property, income and sales taxes. It carries high political stakes for President Donald Trump and Republican leaders in Congress, who view the adoption of tax cuts as central to the GOP’s chances for success at the polls next year.

Trump and the Republicans have promoted the legislation as a boon to the middle class, bringing tax relief to people with moderate incomes and boosting the economy to create new jobs.

Yet a congressional analysis finds that the Senate measure would actually increase taxes in 2019 for 13.8 million households earning less than $200,000 a year. That group, about 10 percent of all taxpayers, would face tax increases of $100 to $500 in 2019, the nonpartisan Joint Committee on Taxation found. There also would be increases of greater than $500 for a number of taxpayers, especially those with incomes between $75,000 and $200,000. By 2025, 21.4 million households would have steeper tax bills.

The analysts found the tax increases would be similar under the House bill.

The newest analysis was provided as the Senate’s tax-writing committee was scheduled to begin wading through the Senate measure on Monday afternoon. The House is expected to vote on its bill Thursday. The House Ways and Means Committee approved it last week on a party-line 24-16 vote.

With few votes to spare, Republicans leaders hope to finish up a tax overhaul by Christmas and send the legislation to Trump for his signature. House leaders have compromised with some rank-and-file Republicans in the hope of passing their version of the bill this week.

Trump’s tweet injects a degree of uncertainty in the process as the GOP tries to deliver on the president’s top legislative priority and hold onto its majorities in next year’s midterm elections.

Neither bill includes a repeal of the so-called individual mandate of Barack Obama’s Affordable Care Act, the requirement that Americans get health insurance or face a penalty. Several top Republicans have warned that including the provision would draw opposition and make adoption tougher.

Underscoring the difficulty, the chairman of the House Ways and Means Committee said Sunday he was certain that chamber won’t go along with the Senate’s proposal to eliminate the deduction for property taxes.

Of the differences between the two bills, perhaps the biggest is that the House bill would allow homeowners to deduct up to $10,000 in property taxes while the Senate proposal unveiled would simply eliminate the deduction.

The deduction is particularly important to residents in states with high property values or tax rates, such as New Jersey, Illinois, California and New York. Rep. Kevin Brady, chairman of the Ways and Means Committee, said he has been working with lawmakers in those states to ensure the House bill “delivers this relief” and that he is committed to ensuring the proposal stays in the final package.

“It’s important to make sure that people keep more of what they earn, even in these high-tax states,” Brady said during an appearance on “Fox News Sunday.”

Democrats are solidly opposed to the GOP revamp, so the Republicans must find agreement among themselves to have any hope of adoption.

Both the House and Senate versions of the legislation would eliminate deductions for state and local income taxes, as well as for sales taxes that have been paid. Sen. Chuck Schumer, D-N.Y., said in response to Brady’s pledge that Republicans should fully restore what is referred to as the SALT deduction, or millions of middle-class families would end up paying higher federal income taxes,

The House’s so-called ‘compromise’ would be saying to the middle class we’ll only chop off four of your fingers instead of all five,” Schumer said in a statement.

A central feature of both bills is a reduction in the corporate tax rate from 35 percent to 20 percent. The Senate version would delay the reduction by a year. Treasury Secretary Steven Mnuchin said Sunday on CBS’s “Face The Nation” that he was confident the differences would not prevent the two chambers from reaching agreement.

Copyright 2017 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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