White House Plans to Negotiate Tax Overhaul Behind Closed Doors
The White House plans to privately negotiate a massive overhaul of the tax system with Republican leaders in Congress, possibly giving rank-and-file members little if any say over the finished product, according to a top aide to President Donald Trump.
Gary Cohn, Trump’s top economic aide, said Tuesday the administration doesn’t want to engage in prolonged negotiations after the package is made public this fall. Cohn said the goal is to release the overhaul in the first two weeks of September.
“We don’t want to be negotiating the tax bill on the floor,” Cohn said at a meeting of technology executives.
This type of top-down approach has a sketchy record on Capitol Hill, especially on issues as difficult to maneuver as the first remake of the nation’s tax code in 31 years. Earlier this year, House members balked when Trump officials demanded that they vote on a bill to repeal and replace former President Barack Obama’s health law.
The House narrowly passed the bill only after lengthy negotiations among lawmakers.
Senate Republicans have been widely criticized for crafting their health care bill behind closed doors, with even some in the GOP complaining about the secretive process.
Nonetheless, Republican leaders put a happy face on their efforts Tuesday, despite offering no evidence of progress in overcoming their differences.
“Let’s not talk about why we can’t do something. Let’s talk about how fantastic things will be if we get this done,” House Speaker Paul Ryan, R-Wis., told the National Association of Manufacturers. “Let’s not talk about this little tax break or that little tax break. Let’s talk about the big picture.”
In April, the administration unveiled a one-page proposal that called for massive tax cuts for businesses and a bigger standard tax deduction for middle-income families, lower investment taxes for the wealthy and an end to the federal estate tax for the superrich—like the president and his family.
The plan also calls for eliminating the federal deduction for state and local taxes, a proposal opposed by Democrats and some Republicans in states like New York, New Jersey and California.
Ryan said he is confident Congress can pass a tax package by the end of the year, despite political divisions among Republicans and a crowded legislative agenda for Congress.
He acknowledged it won’t be easy. But he preached against settling for something less than a complete overhaul of the tax system.
A growing number of Republicans say they would rather just cut taxes than take on the difficult task of simplifying the tax code, which would include eliminating many tax breaks to finance lower overall tax rates.
“We will not wait for a path free of obstacles because it does not exist. And we will not cast about for quick fixes and half-measures,” Ryan said. “Transformational tax reform can be done, and we are moving forward. Full speed ahead.”
House Democratic Leader Nancy Pelosi’s office released a statement calling Ryan’s remarks “minor platitudes for hard-working Americans,” short on specifics.
It has been about a year since Ryan and other House Republicans released a blueprint for how they would overhaul the tax code. Yet Ryan didn’t provide any additional information about his tax plan or the state of negotiations among White House officials and Republican leaders in Congress.
Even if the White House were to forge an agreement among congressional leaders, the resulting package would still need to get buy-in from rank-and-file members, said Rohit Kumar, a former tax counsel to Senate Majority Leader Mitch McConnell, who now heads PwC’s Washington tax office.
“The one lesson we learned from 2017 is that everything takes longer than you think it will,” he said.
One area of disagreement is Ryan’s support for a new tax on imports to help finance a lower overall tax rate for corporations, and to encourage U.S. companies to stay in the United States. The tax, however, has no support in the Senate and is vigorously opposed by retailers who worry that it will increase the cost of consumer goods.
Congressional Republicans are planning to pass a tax package under a procedure in which they need only a simple majority in the Senate—preventing Democrats from blocking it. Under the procedure, the tax package cannot add to long-term budget deficits.
That means for every tax cut, there has to be a tax increase, at least over the long term.
Vice President Mike Pence, who addressed the manufacturers before Ryan, promised “the largest tax cut since the days of Ronald Reagan.”
“We’ll cut taxes across the board for working families, small businesses and family farms. We’ll simplify the tax code by cutting seven brackets down to three,” Pence said. “We’ll eliminate the alternative minimum tax, end almost every deduction and under President Donald Trump we’ll repeal the death tax once and for all.”