Republicans, Democrats have similar goals, very different positions on tax reform
House members from both parties said Wednesday that they want to see Congress produce a tax reform package that simplifies the tax code and benefits the middle class, but they disagreed on whether the proposed Republican plan would accomplish that goal.
“I want to see the tax reform where we see everything simplify,” said Rep. Will Hurd, R-Texas. “I want people to do taxes on half piece of paper. I want to see them have more money in their pockets. I want to make sure that small businesses that employ more people get a tax cut as well because we know when small businesses have more money, they’re going to invest in their shops and their people.”
Many details remain unclear, but a framework released by Republican leadership last month included reducing the number of tax brackets and lowering rates, doubling the standard deduction, and jettisoning most other deductions besides mortgage interest and charitable contributions. It also sought a cut in the corporate tax rate from 35 to 20 percent.
Rep. Patrick McHenry, R-N.C., predicted strong economic growth if the Republican plan is implemented that will have a widespread impact beyond just reducing tax rates for many workers.
“Families and communities will receive the greatest benefit as a result of tax reform and reduction for the middle class,” he said.
Although many corporations pay far below the nominal corporate tax rate, Rep. Blaine Luetkemeyer, R-Mo., argued that cutting their taxes while eliminating some current loopholes will ultimately lead to higher wages and better conditions for workers.
“It’s about growing the economy and a rising tide floats all boats, so everybody will be able to experience some benefits, I think, from the tax cuts, even on the corporate side,” he said.
Democrats have blasted the Republican framework as a giveaway to the rich and corporations that some experts say would leave some middle class families paying higher taxes.
“First and foremost, we should really characterize this Republican proposal for what it is, which is a big tax cut for the richest people in this country,” Rep. David Cicilline, D-R.I., said.
Rep. Lois Frankel, D-Fla., hopes activists who rose up against efforts to repeal the Affordable Care Act will generate a similar outcry over tax reform.
“I know Republicans think they need a big win but this tax plan that they are promoting is a big loss for most Americans, so I expect there’s going to be a big fight,” she said. “I know I’m going to fight back.”
Independent analyses have found that as much as 80 percent of the benefits of the tax cuts could go to the top earners, but Republicans insisted that any conclusions drawn now are premature because they have not settled on final numbers for the bill that they intend to vote on next month.
“They’re making a false accusation based off of faulty numbers,” McHenry said. “Our tax reform is targeted at middle class families and the proof will be when we produce legislative text and individual members of families can put their tax information into a calculator online and determine whether or not they’re better off than under the current tax regime.”
Luetkemeyer noted that some economists do predict the economic growth spurred by the tax cuts would help overcome some of the cost.
“There are numbers out there that show it’s not nearly as deficit-damaging as that,” he said.
However, he also suggested those focused on how much money the government is receiving in taxes are looking at the issue through the wrong lens.
“The philosophy that it’s the government’s money is something that has got to be changed,” he said. “It’s not their money. It’s the money that the taxpayers have earned, that the companies have earned and it should be allowed to be kept with them so they can invest in themselves, their families, their futures, and their businesses, so they can grow and provide jobs and grow the economy.”
Democrats fear that any shortfall in tax receipts will lead to cuts in government programs that help the most vulnerable.
“The deficit that it will leave will probably result in devastating cuts for Medicare and Medicaid,” Frankel said.
“They’re going to borrow money, give a big tax cut to the richest in the country, and to pay for it, they’re going to cut important investments for middle class families,” Cicilline said.
While Democrats are so far fiercely opposed to the Republican plan, Hurd predicted there would be less internal strife within the House GOP than there was over health care.
“I think this is one issue that all the branches of the Republican Party are pretty unified on, especially the House,” he said. “We’ve been talking about details for almost two years.”
Republicans are making a concerted effort to get a tax reform bill on President Trump’s desk by the end of the year, but Democrats continue to demand more open, bipartisan negotiations than was seen in the secretive development of the House health care reform bill earlier this year.
“We should have a bipartisan process that brings Republicans and Democrats together on building a fairer tax code,” Cicilline said. “The focus of a tax reform bill should be reforming the tax code to make it fairer and make a tax code that will generate good-paying jobs.”
Democrats are skeptical that any tax cuts for the wealthy will help produce a fairer system, especially if federal tax revenues fall as a result.
“It’s going to mean we’re going to have less money to invest in infrastructure, in education, in our environment,” Frankel said. “We need a better deal. I don’t expect Republicans are going to give us one.”