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Trump Tax Plan: Will Ryan And McConnell Pass It?

President Trump has released the framework for his tax reform and reduction plan to positive reaction from conservatives.

Our friends at the Club for Growth issued a statement saying, “Fundamental tax reform comes around only Trump tax planonce in a generation, and this is our chance.  The outline is both aggressive and very pro-growth with its rate reductions.  Club for Growth congratulates the members of the Big Six for their hard work and will continue to support the pro-growth efforts of the Trump administration and Congress as they seek to make tax reform a reality.  To this end, the Club will also work with Congress to pass a budget in order to get reconciliation tax instructions.”

The House Freedom Caucus, the steadfast conservative warriors who have held establishment Speaker of the House Paul Ryan’s feet to the fire on many issues were also positive about the President’s Plan:

President Trump has delivered a forward-looking tax reform framework that will let hard working Americans keep more of their money, simplify our system, end carve outs for special interests, and will help make our businesses competitive abroad. The Freedom Caucus looks forward to sending a final bill based on this framework to President Trump's desk as soon as possible.

After looking over the President’s “framework” we also like it, the Trump tax reform and reduction framework calls for legislation that:

Lowers Rates for Individuals and Families
The framework shrinks the current seven tax brackets into three – 12%, 25% and 35% – with the potential for an additional top rate for the highest-income taxpayers to ensure that the wealthy do not contribute a lower share of taxes paid than they do today.

Doubles the Standard Deduction and Enhances the Child Tax Credit
The framework roughly doubles the standard deduction so that typical middle-class families will keep more of their paycheck. It also significantly increases the Child Tax Credit.

Eliminates Loopholes for the Wealthy, Protects Bedrock Provisions for Middle Class
To provide simplicity and fairness the framework eliminates many itemized deductions that are primarily used by the wealthy, but retains tax incentives for home mortgage interest and charitable contributions, as well as tax incentives for work, higher education, and retirement security.

Repeals the Death Tax and Alternative Minimum Tax (AMT)
The framework repeals the unfair Death Tax and substantially simplifies the tax code by repealing the existing individual AMT, which requires taxpayers to do their taxes twice.

Creates a New Lower Tax Rate and Structure for Small Businesses
The framework limits the maximum tax rate for small and family-owned businesses to 25% - significantly lower than the top rate that these businesses pay today.

To Create Jobs and Promote Competitiveness, Lowers the Corporate Tax Rate
So that America can compete on level playing field, the framework reduces the corporate tax rate to 20% – below the 22.5% average of the industrialized world.

To Boost the Economy, Allows “Expensing” of Capital Investments
The framework allows, for at least five years, businesses to immediately write off (or “expense”) the cost of new investments, giving a much-needed lift to the economy.

Moves to an American Model for Competitiveness
The framework ends the perverse incentive to offshore jobs and keep foreign profits overseas. It levels the playing field for American companies and workers.

Brings Profits Back Home
The framework brings home profits by imposing a one-time, low tax rate on wealth that has already accumulated overseas so there is no tax incentive to keeping the money offshore.

What’s not to like in the President’s plan?

These are all ideas that have been proposed by conservative think tanks and Republican legislators for years. The only thing we see missing is making the reductions and reforms retroactive to January 2017 to accelerate the pro-growth impact, so for the most part they shouldn’t be controversial.

The framework was crafted by the so-called “Big Six” players: Treasury Secretary Steven Mnuchin, Trump economic advisor Gary Cohn, House Speaker Paul Ryan, House Ways and Means Chairman Kevin Brady, Senate Majority Leader Mitch McConnell, and Senate Finance Chairman Orrin Hatch, so one would think it should be readily accepted by the Republican majority on Capitol Hill.

But let’s not forget conservatives said the same thing about the various Obamacare repeal and replace bills, some of which had passed both houses of Congress only to go down in defeat when establishment Republicans changed their votes and shot down bills they’d previously supported.

We think President Trump’s tax reform and reduction framework fulfills his campaign promise on taxes and will make a substantial contribution toward economic growth. We urge our conservative friends and readers to call their Representative and Senators (the Capitol Switchboard is 1-866-220-0044) to tell them to support the President’s framework and make it retroactive to January 2017 to accelerate the impact on economic growth.

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