Trump to sell tax plan with rosy Treasury estimate
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.”
The White House said Monday that 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. 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 new, 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, D-N.Y., 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. Treasury noted that if separate projections of revenue were made for the House bill, the results would be similar.
It’s a momentous week for the tax legislation. The 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 this past summer. Voters who will decide which party holds the majority in next year’s midterms elections are watching.
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.
Trump on Sunday offered an upbeat assessment.
“Getting closer and closer on the Tax Cut Bill. Shaping up even better than projected,” Trump tweeted on his way to his golf club in West Palm Beach, Florida. “House and Senate working very hard and smart. End result will be not only important, but SPECIAL!”
The House and Senate bills would cut taxes by about $1.5 trillion over the next decade while adding billions to the $20 trillion deficit. They would double the standard deduction used by most Americans to $12,000 for individuals and $24,000 for couples.
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.
“I feel very confident we’re going to get this done … at the end of the day we’re going to get this to the president’s desk and he’s going to sign it,” House Majority Leader Kevin McCarthy, R-Calif., said Sunday in an interview on Fox News Channel.
Just a few weeks ago, lawmakers were unyielding on their insistence that the corporate tax rate be slashed from 35 percent to 20 percent. Now, one way to finance the changes on state and local taxes would be to cut the corporate tax rate to 21 or 22 percent instead.