President Donald J. Trump’s tax plan is awesome.
Speaker of the House Paul Ryan’s plan to pass President Trump’s tax plan is the opposite of awesome.
First, the details of the plan are great. If you are a liberty-minded conservative, you love this plan. It follows through on a Trump campaign promise—lower tax rates for average Americans and business and eliminating some of the tax breaks for special interests.
When Trump was running for president, he proposed the largest tax cut in American history. Today, he followed through on that campaign promise. The Tax Foundation analyzed Trump’s campaign tax plan and found that his plan would have cut taxes by $11.98 trillion over the next 10 years using static scoring. For those who believe that privately earned income is better served in the private sector, rather than being squandered by the inefficient allocator of resources knowns as the federal government, this is great news.
Trump’s proposed plan held close to his campaign promise according to the Washington Post, which reported, “[Trump’s tax plan] would eliminate the seven existing income tax brackets and replace them with three brackets, containing new rates of 10 percent, 25 percent and 35 percent, based on someone’s income.
This is a move in the direction of a flat tax and a simplified tax code. Grover Norquist, president of Americans for Tax Reform, argues that the plan will “turbocharge” the economy by cutting “taxes for businesses and individuals and simplifies the code so Americans can file on a postcard.” Personally, the Trump tax plan was one of the reasons I voted for Trump, and I hope Congress can find a way to unify around the idea of a simplified tax code that has the support of all Americans.
The Post also reports that on the business side “Trump’s proposal would lower the corporate tax rate from 35 percent to 15 percent.” I love the bold idea of promoting tax cuts for taxpaying citizens and American business to encourage businesses to stay in America and not reorganize in low tax nations. Right now, the U.S. corporate income tax is high and sending business abroad. This tax plan makes America tax competitive with other nations and will further incentivize governments to lower taxes.
Dan Mitchell of the Cato Institute argues that “the lower corporate tax rate would have a big supply-side impact (and there’s plenty of evidence from overseas to support that notion), but many of the other provisions of his plan are sure to reduce revenue.” Mitchell worries that Trump needs to push for entitlement reform to be serious about lowering government spending and as a means to restrain big spending Members of Congress from bankrupting the nation.
Reports indicate that this will be a legislative play using the reconciliation process that allows for Congress to pass legislation while avoiding the prospect of a filibuster in the Senate.
The table is set for victory, yet as we have witnessed too many times, this Congress is adept at “Snatching Defeat from the Jaws of Victory.”
There is one yuge stumbling block to get the Trump tax plan passed. His name is Speaker of the House Paul Ryan and he leads a meek Republican Caucus who have yet to take a stand to fight for a core Republican idea. Ryan and House Republicans are the same guys who fumbled away the idea of fully repealing ObamaCare after years of promising full repeal on the campaign trail. Now these same risk averse members are in charge of passing a massive tax cut for all Americans and a plan that dramatically reforms the tax code. In my heart, I don’t believe that Ryan or House Republicans (except for the House Freedom Caucus) are up for the fight.
Part of the problem is that the House Republican caucus has way too many squishy members of the Tuesday Group and not enough bold members of the House Freedom Caucus. Ryan has a tough job, yet he seems like the king of negotiating against himself. My worry is that this House—and Senate, for that matter—leadership team does not have the intestinal fortitude to tell Republican rank and file members that this plan is a take it or leave it proposition that the President has demanded. Get on board or get off the ship and out of the party.
The one big difference in strategy between the failed effort to repeal ObamaCare and this effort to reform the tax code is the starting point. The effort to “repeal” ObamaCare did not start out with an offer of full repeal of President Obama’s signature law. The Republicans’ first offer was terrible and accepted the premise of ObamaCare, that mandates are necessary. Some Republicans actually defended the most offensive elements of ObamaCare and argued that all Americans have a right to government-provided health insurance.
Not decent health care—but government-mandated health coverage that is expensive and leads to a degradation of service. ObamaCare is based on socialism, yet some Republicans were willing to swallow ObamaCareLite that is also know known derisively as “RyanCare.”
The tax debate is starting on the right flank with President Trump controlling the first offer to Democrats. This is far better than relying on Congressional plans that include something called “revenue neutral” tax reform. That is where some people pay more and others play less with minimal reform. Trump’s first offer is bold and strong.
Congress has been sabotaging Trump’s agenda at every turn, yet they have one opportunity to right the ship and make amends with the voters who launched President Trump into office. If Republicans reform the tax code in a Reaganesque way, they will be rewarded. A massive tax cut for all Americans would be Trump’s signature accomplishment of this first term. If Congress screws this up—like they have on so many other issues—expect Trump to have a difficult time securing a second term and many Republican House members will be tossed out of office in the next election cycle.
Tax cuts are good politics and it defies logic that after years of beating the drum of tax reform, that some members are scared to move forward on this bold plan. I am fully on board with my former boss Sen. Rand Paul when he argues that “once upon a time, most Republicans believed in tax cuts.” Mitchell is worried, like Sen. Paul, that this big tax cut plan will not pass because Republicans are too worried about “less money going to Washington.” I agree that it is unlikely that the Surrender Caucus in the Senate and the meek Republicans in the House will transform into brave patriots willing to take a political risk to make the American tax code great again, but I hope I am wrong.
Yet, Grover Norquist does think I am wrong and he makes a strong argument that the forces for evil outside of Congress and on the lobbyist haven K Street will not marshal opposition. Norquist tells the Observer that “the rate on business is so low that it will be hard for any business or industry to get worked up and excited about fighting the overall plan. The personal and family deduction is so large no single interest group deduction has as many devotees. Trump’s legislation defangs the lobbies that have defended their favorite tax deduction and credit in the past.” This fact gives me hope that Congress may actually step up to the plate and surprise Americans by getting behind the Trump tax plan.
Brian Darling is a former counsel for Sen. Bob Smith, Sen. Mel Martinez and Sen. Rand Paul. He is the author of a Heritage Foundation policy paper titled “The Filibuster Protects the Rights of All Senators and the American People.” Follow him on Twitter @BrianHDarling.