Trump Tells Democrats He’ll ‘Get Killed’ Financially in GOP Tax Bill

President Donald Trump called 12 Senate Democrats Tuesday, hoping to sway them in favor of the Republican tax cut bill, and told them he would personally “get killed” financially by the GOP bill. He said the wealthy need a repeal of the estate tax, according to multiple people who were present.

“My accountant called me and said ‘you’re going to get killed in this bill,'” the president said during a phone call from his trip in South Korea. He was apparently trying to increase Democratic support by claiming the bill would hurt wealthy taxpayers like himself, making the point that only the repeal of the estate tax would provide him any benefit.

Many of those Democrats are from states Trump won in 2016.

After the call with Trump ended, the meeting, which included his legislative affairs chief Marc Short and economics adviser Gary Cohn, turned into a sparring match between Democrats and White House officials over a politically broken Senate and who is to blame, multiple senators who attended the meeting said.

Short confirmed the president’s remarks and said they were part of a discussion on the elimination of individual deductions in the tax bill. Short said the estate tax was a separate issue.

Trump told the Democrats on the phone that he wanted a repeal of the estate tax in the bill because they had to give something to rich people, people in the room said.

“I think that we’ve been advocating for the elimination of the death tax for a while,” Short told NBC News, using the favored Republican term for the estate tax.

Trump, a billionaire, has not released any tax returns and so it has not been possible for the public to assess how this plan could benefit him personally and his family. Senate Republicans are rushing to release their tax cut bill later this week.

Asked to comment on the president’s remarks to the group, White House spokeswoman Sarah Sanders said, “The president did call in and urged senators to support the bill.”

Sen. Sherrod Brown, D-Ohio, said the president told the Democrats “this bill is terrible for rich people, and we (Democrats) don’t really agree.”

An analysis by the Joint Committee on Taxation found that after 2023, people making between $20,000 and $40,000 would see a tax increase. People making $200,000 to $500,000 per year would also see a tax increase after 2023 under the current GOP plan. A repeal of the estate tax would give the wealthy an additional $300 billion dollar tax break.

The House is amending its version of a tax overhaul initially released last week and the Senate is expected to unveil its version of a bill on Thursday. The Senate Finance Committee is expected to move quickly, advancing the measure though the committee process starting Monday, a timeline that Democrats say shuts them out of the process.

Senate Democrats complained about components of the House bill during the meeting, but Short and Cohn told them that the Senate bill will be much different than the House version and that the Senate bill is the one that matters.

The hour-long meeting became increasingly testy when Democrats complained about the process. Republicans have been crafting a bill behind closed doors and have sought no Democratic input.

Sen. Jon Tester, D-Mont., grew frustrated and got into a heated back and forth with Short.

“Give us your input now,” Short told Tester, according to the Montana senator.

Democrats continued to complain about Republicans locking them out of the process, making the argument that true bipartisan tax overhaul should get the support of 70 senators.

But Short responded to their concerns by blaming Democrats for Senate dysfunction because they have held up Trump’s nominees.

[NBC News]

Reality

Donald Trump stands to save over $1 billion dollars in taxes, with his tax reform.

Trump Promises ‘No Change to Your 401(k)’ as Congress Considers a Contribution Cap

President Trump said early on Monday that his proposed tax plan would not prompt any changes to Americans’ tax-deferred retirement plans, pushing back against reports that the Republicans are weighing a proposal that would significantly reduce the income workers can save in these popular programs.

Mr. Trump’s shutdown of the proposal is the first of what many Republicans privately fear could be a presidential pattern that disrupts their efforts to pass a sweeping overhaul of the tax code. In it, Mr. Trump appeared to rule out a politically difficult idea, which, if enacted, would have provided some revenue to help pay for the tax plan.

Republicans’ ability to win passage of a tax package hinges on its ability to survive a complex set of legislative restrictions in the Senate. Republicans are attempting to cut business tax rates deeply, and also to cut individual tax rates, using a legislative route that allows them to bypass a Democratic filibuster and pass a bill with a simple Senate majority. To do that, they will need to make some tough political choices, eliminating some popular tax breaks, or employing some budgetary accounting tricks, in order to offset lost revenues from rate cuts.

Mr. Trump’s tweet concerned one of those accounting maneuvers, which would have allowed Republicans to effectively borrow tax revenues from the future to offset some rate cuts today. Reducing 401(k) contribution limits would force retirement savers to pay more in taxes today, as they sock away money, but less in the future, when they began withdrawing retirement funds tax-free.

Republicans had not decided whether to include a reduced cap on contributions in their final version of the tax bill even before Mr. Trump’s tweet.

Details of the Republicans’ tax bill have been closely held, and they would not comment on Friday about possible changes to 401(k) policies. It was not clear from Mr. Trump’s Twitter post on Monday whether he meant that he would not support a bill including alterations to 401(k) limits or that he knew the Republicans’ draft bill did not include such changes. Several sources said last week that such changes were under consideration as House Republicans prepare to release a tax bill in the coming weeks.

Democrats and other critics of Mr. Trump’s tax plan have said it would not help middle-class Americans, despite White House and Republican promises. “Tax cuts for corporations and the wealthiest Americans should not be paid for by increasing taxes on middle class Americans saving for retirement,” a group of Democratic senators, led by Senator Sherrod Brown of Ohio, wrote to the administration in September.

Any plan to cap 401(k) savings could bolster those arguments.

Republicans are discussing proposals that would potentially cap worker contributions at $2,400 annually for 401(k) retirement accounts, lobbyists and consultants have said. Currently, workers can put away $18,000 a year in tax-deferred plans; workers who are over 50 years old can save up to $24,000.

Advocacy groups have sprung up in Washington to fight any proposed change to those limits. One of those groups, the Save our Savings Coalition, said in a statement on Monday that it was “thrilled to see the President’s statement today, though we will continue to fight to ensure lawmakers do right by the middle class by preserving and expanding our retirement system as tax reform moves through Congress.”

[The New York Times]

Trump Returns to False Tax Claim as He Pushes For Reform

As part of a push for tax reform, President Trump bemoaned that the United States is the most heavily taxed nation on Earth.

That’s not true.

Trump is traveling to North Dakota to deliver a speech Wednesday afternoon on the importance of streamlining the tax code and easing the burden of taxes on citizens and businesses. In an early morning tweet, he promoted this trip and promised that under his administration the U.S. would no longer be “the highest taxed nation in the world.”

This statement is completely false. According to 2015 data from the Organization for Economic Co-Operation and Development (OECD), taxation accounted for 26.4 percent of the United States’ gross domestic product (GDP). This was lower than the average for the 35 nations in the OECD (34.3 percent) and in some cases far lower than comparable countries (45.5 percent in France, for instance).

In April 2016, the Pew Research Center concluded that U.S. tax bills are below the average for developed nations by examining OECD data dating back to 2001. It calculated “national-level income taxes plus mandatory social-insurance contributions as a percentage of gross income” for four different family types: a single working parent, a single working person without children, a married couple with two children where both parents work, and a married couple with two children where only one parent works. In all cases, the U.S. was below the average.

Trump has repeatedly touted this false claim. For instance, in a heated exchange with “Meet the Press” host Chuck Todd in May 2016, Trump said, “We’re the highest-taxed nation in the world. Our businesses pay more taxes than any businesses in the world. That’s why companies are leaving.” He also repeated the falsehood during debates and speeches.

PolitiFact rated Trump’s claim that the U.S. is “the highest taxed country in the world” as false in February 2016 after a Republican primary debate. The fact-checking website concluded that the U.S. “is far from the most taxed nation in the world, whether it’s an advanced industrialized economy or not.”

The website repeated its assessment on Wednesday after Trump’s tweet.

The Committee for a Responsible Federal Budget, a public-policy think tank, also rated Trump’s claim as false: “Notwithstanding our high corporate tax rate, the U.S. is not close to being the highest-taxed country in the world.”

The corporate income tax rate in the U.S. is high, at 35 percent, but the effective corporate tax rate — after accounting for deductions and tax breaks — is 18.6 percent, according to the Congressional Budget Office.

Determining which country has the highest tax rate is complicated and depends on the data researchers examine. Using data from OECD, Investopedia reported that Portugal has the highest tax rate for people with high incomes (61.3 percent); Belgium has the highest level for average-earning single people without children (42 percent); and Turkey has the highest levy for average-earning married couples with two children where only one spouse works (25.8 percent). And according to the World Economic Forum’s Global Competitiveness Report, Argentina’s total tax rate is an extraordinary 137.3 percent.

[Yahoo]

Trump: Senate Republicans Should Use the ‘Nuclear Option’ to Pass Healthcare and Tax Cuts

President Donald Trump on Tuesday said the Senate should get rid of the legislative filibuster so that it could pass healthcare and tax-cut bills.

“The U.S. Senate should switch to 51 votes, immediately, and get Healthcare and TAX CUTS approved, fast and easy,” Trump tweeted. “Dems would do it, no doubt!”

The filibuster allows senators to hold up legislation without a 60-vote threshold.

Changing the floor rules to end the filibuster has been considered a “nuclear option” for lawmakers, as it could come back to bite the GOP if the Democrats were to retake the Senate.

In recent years, however, the party in control of the Senate has done away with other filibusters in an attempt to circumvent the opposition. Democrats eliminated the filibuster for executive and judicial nominees in 2013. And in April, Senate Majority Leader Mitch McConnell scrapped the filibuster for Supreme Court nominees to confirm Trump’s nominee, Neil Gorsuch.

The GOP is circumventing a possible filibuster for its healthcare bill by introducing it using a process known as budget reconciliation. As long as the bill cuts the federal deficit, it is not subject to a 60-vote threshold.

Both the GOP healthcare bill, the American Health Care Act, and Trump’s tax proposals have faced unanimous opposition from Democrats.

Trump’s suggestions followed a series of tweets Tuesday in which he criticized Germany and attacked reports on ties between his campaign and Russian officials.

[Business Insider]

Trump’s Tax Plan: Low Rate for Corporations, and for Companies Like His

President Trump plans to unveil a tax cut blueprint on Wednesday that would apply a vastly reduced, 15 percent business tax rate not only to corporations but also to companies that now pay taxes through the personal income tax code — from mom-and-pop businesses to his own real estate empire, according to several people briefed on the proposal.

The package would also increase the standard deduction for individuals, providing a modest cut for middle-income people and simplifying the process of filing tax returns, according to people briefed on its details. That proposal is opposed by home builders and real estate agents, who fear it would diminish the importance of the mortgage interest deduction. And it is likely to necessitate eliminating or curbing other popular deductions, a politically risky pursuit.

As of late Tuesday, the plan did not include Mr. Trump’s promised $1 trillion infrastructure program, two of the people said, and it jettisoned a House Republican proposal to impose a substantial tax on imports, known as a border adjustment tax, which would have raised billions of dollars to help offset the cost of the cuts.

With that decision, Mr. Trump acceded to pressure from retailers and conservative advocacy groups, but the move could deepen the challenge of passing a broad tax overhaul in Congress, where concern about the swelling federal deficit runs high. His plan would put off the difficult part of a tax overhaul: closing loopholes and increasing other taxes to limit the impact of tax cuts on the budget deficit.

Republicans are likely to embrace the plan’s centerpiece, substantial tax reductions for businesses large and small, even as they push back against the jettisoning of their border adjustment tax. The 15 percent rate would apply both to corporations, which now pay 35 percent, and to a broad range of firms known as pass-through entities — including hedge funds, real estate concerns like Mr. Trump’s and large partnerships — that currently pay taxes at individual rates, which top off at 39.6 percent. That hews closely to the proposal Mr. Trump championed during his campaign.

But Mr. Trump’s decision to extend the corporate tax cut to real estate conglomerates like his own will give Democrats a tailor-made line of attack.

“Yesterday, we learned President Trump wants to slash the corporate tax rate, even though corporations already dodge most of their tax responsibilities while making record profits,” said Frank Clemente, executive director of the liberal Americans for Tax Fairness. “Today, we find out it’s even worse. In trying to slash taxes for ‘pass through’ business entities, Trump is seeking to dramatically reduce his own tax bill.”

The people who were briefed on the plan spoke on the condition of anonymity before a formal announcement that Mr. Trump has said will come on Wednesday, three days before he reaches the 100-day mark in office with nothing to show for his promises to cut taxes or revamp the health care system.

The border adjustment tax may be revisited later but was considered too controversial to include now.

Spokeswomen for the White House and the Treasury Department declined to comment on the details of the plan before Wednesday’s announcement, which is expected to contain only broad principles, leaving unanswered crucial questions about the financing of the package and the process for advancing it through Congress.

Emerging from a meeting at the Capitol where he briefed Republican congressional leaders on Tuesday evening, Treasury Secretary Steven Mnuchin said participants had “very, very productive discussions” and were united in their desire to accomplish a tax overhaul this year.

The broad contours of the plan seemed to please conservatives who had worried in recent weeks that Mr. Trump, who has dropped or modified many of the major proposals of his campaign, was drifting away from the plan he had laid out for voters.

“Conservatives are going to be very happy with this plan, because it achieves a lot of the objectives that we’ve wanted: lower business taxes, simplification and not a major tax increase that is unacceptable,” said Stephen Moore, an economist at the Heritage Foundation who advised Mr. Trump’s campaign and helped craft his tax proposal.

But Mr. Moore conceded that finding ways to offset the large revenue reductions envisioned in the blueprint would be a challenge.

“That’s the unknown right now, is whether there is some sort of pay-for for any of this,” he said.

Government officials crafting the tax plans are aware of the math problem, one of the people involved in the proposal said, but they see the 15 percent corporate tax rate as a compelling starting point for negotiations. Mr. Trump may yet reveal other tactics for replenishing lost tax revenue, someone who has been briefed on the plans said.

But the final plans remain very much in flux. At midafternoon on Tuesday, for instance, it was still not clear whether personal income-tax rate cuts or an increase in the standardized deduction for individuals would be part of Wednesday’s announcement.

The demise of the border adjustment tax was met with relief by Republicans in the Senate, who had been cool to it from the start.

On Tuesday, Senator John Cornyn, Republican of Texas, said it was safe to conclude that the provision was “not going anywhere” because of skepticism in the Senate.

But Mr. Cornyn described Mr. Trump’s plan to cut the corporate income tax to 15 percent as “pretty aggressive,” with unknown consequences for the deficit.

Other Republican senators appeared ready to embrace a tax proposal that adds to the deficit in the name of jump-starting the economy. Republicans appear intent on using parliamentary rules that would block Democrats from filibustering the plan in the Senate, but would also put a time limit on the tax cuts.

“I’m open to getting this country moving,” said Senator Orrin G. Hatch of Utah, chairman of the powerful Senate Finance Committee. “I’m not so sure we have to go that route, but if we do, I can live with it.”

Most analysts say the notion that Mr. Trump’s tax cuts will pay for themselves is unrealistic. A Tax Foundation analysis concluded this week that, on its own, a 15 percent corporate tax rate would reduce federal revenue by about $2 trillion over a decade. To make up for those losses without raising taxes elsewhere, the economy would have to become 5 percent larger.

Senator Roy Blunt, Republican of Missouri, said he was also open to tax cuts with an expiration date if that was the only way to get them passed without Democratic support, pointing to President George W. Bush’s cuts.

“You look at the tax cuts from 2002 and 2003 — well over 90 percent of them became permanent law,” Mr. Blunt said.

Democrats have criticized Republicans for failing to engage with them on a tax overhaul. Senator Ron Wyden of Oregon, the ranking Democrat on the Finance Committee, said he would be open to working with Republicans on a plan that would bring home corporate profits parked overseas and use some of the funds to pay for infrastructure.

But Senator Mitch McConnell of Kentucky, the majority leader, said on Tuesday that he intended to pass tax legislation through budget rules that would block a filibuster. He accused Democrats of being more interested in “wealth transfers” than in spurring economic growth.

So far, the Senate has taken a back seat in tax discussions. The abandonment of the border adjustment tax will deal a blow to the comprehensive rewrite of the tax code championed by Speaker Paul D. Ryan and Representative Kevin Brady of Texas, the chairman of the Ways and Means Committee.

Mr. Brady said Tuesday that he would press ahead with the import tax, not merely because it would make up for lost revenue but because it would protect American jobs.

However, he acknowledged that his goal of producing legislation before summer was slipping.

“I’m less focused on the month than on the year for tax reform, which would be this year,” Mr. Brady said.

(h/t New York Times)

Trump Flip-Flops on Elements of His Tax Plan

Presidential candidate Donald Trump today backed away a bit from his tax plan, describing it as open to negotiation.

Pressed by CNBC as to how he could simultaneously brand himself as a populist who will take on wealthy elites while proposing sweeping tax cuts for billionaires, Trump backed away from his plan.

I am not necessarily a huge fan of that. I am so much more into the middle class who have just been absolutely forgotten in our country.

Trump described his tax proposal, which was the most detailed policy paper he put out in the campaign, as merely a starting point for a future deal.

You know, when you put out a tax plan, you are going to start negotiating. You don’t say, ‘OK, this is our tax plan, lots of luck, folks.’ There will be negotiation back and forth. And I can see that going up, to be honest with you.

The Trump tax plan has attracted criticism in two main areas: first, in that it loses too much revenue, and second, in that it primarily benefits high-income taxpayers. Both are shown in the Tax Foundation analysis published last year. A third criticism, albeit a more subtle one, is that Trump’s plan reduces rates without doing much to improve tax bases, and therefore generates less growth than it could otherwise, as Tax Foundation President Scott Hodge has argued.

If Trump moderates some of the elements of his tax plan, he may want to consider getting rid of the preferential rate for pass through income, which benefits wealthier Americans and encourages relabeling, and also reducing the size of the zero bracket in his plan, which is about four times larger than the current standard deduction, and contributes substantially to the plan’s $10 trillion revenue loss.

(h/t Tax Foundation)

Reality

A politician changing their mind toward a better idea can be a good thing as it shows progress. But when a politician changes their mind, not organically, but timed as a means to maximize their popularity, this is called a flip-flop.

In our review of Donald Trump’s tax reform plan would reduce federal revenues by $9.5 trillion dollars over 10 years causing massive cuts from the military to Social Security. Any change here would be progress.

Media

Links

Stop The Donald Trump’s Tax Reform Analysis

1 2