Here’s the current rumor about the great tax reforms:
Top White House and GOP leaders have agreed to raise the lowest individual tax rate from 10 to 12 percent, paired with doubling the standard deduction, 5 senior Republicans tell us.
Why this matters: Trump intends to sell the proposal tomorrow as a populist “tax cut.” But as recently as yesterday top Republicans on Capitol Hill were nervous as they got word that Trump wasn’t entirely thrilled with the product that had been hashed out in immense secrecy for weeks (with two members of his administration, Gary Cohn and Steven Mnuchin, working with GOP leaders.)
Late last night Republicans close to the process felt more confident that Trump had come around to supporting the framework — despite his misgivings about the corporate rate not being low enough and about the political risks of raising the lowest rate (even though many more people will now pay no tax because of the increased deduction, meaning they can accurately call it a tax cut for the middle class as well as for the wealthy.)
Big picture details: Republicans plan to collapse the number of brackets from seven to three. The standard deduction would almost double to $12,000 for a single filer and $24,000 for married couples, meaning Trump can accurately argue that many more low income earners would pay no tax under his plan. As we previously reported, the top tax bracket would fall from 39.6% to 35%.
Yes, but: Trump won’t go into great detail when he talks about the tax plan tomorrow in Indiana, leaving plenty of negotiating room for the tax-writing committees in the House and Senate. As of yesterday morning Trump hadn’t signed off on the final product, and as with all policy announcements involving Trump, Republican Hill leaders will be holding their breaths to some extent until the president actually utters the words. Speaking with conservative groups at the White House yesterday Trump, reassured them of his commitment when he gushed about the “tax cut” he was planning to unveil.
Technically, rate-wise, this is an increase for the poor and a cut for the wealthy. In reality, if any of this is true, it will mean less of an actual burden for all. That might make sense – more sense than the GOP Obama-Trump-Ryan-GrahamCare
repeal replace amendment meddling whatever, which has once again failed.
We’ll know more tomorrow or next year or, certainly, by the mid-terms. Then, suddenly, all the failure will be touted as smashing success. This is why many other countries have more than two parties.