Admin Gives Tax Plan Rosy Assessment 12/12 06:36
President Donald Trump on Wednesday will try to sell the American people on
an unpopular Republican tax overhaul that his administration claims will
generate a large part of $1.8 trillion in new revenue -- a figure that a top
Democratic lawmaker dismissed as "fake math."
WASHINGTON (AP) -- President Donald Trump on Wednesday will try to sell the
American people on an unpopular Republican tax overhaul that his administration
claims will generate a large part of $1.8 trillion in new revenue --- a figure
that a top Democratic lawmaker dismissed as "fake math."
Trump's pitch will focus on how the GOP tax reform plan will lead to a
brighter future for taxpayers and their families, according to spokeswoman
Lindsay Walters. House and Senate negotiators are rushing to finalize a bill
and deliver the measure to Trump before Christmas.
Trump and Republican leaders in Congress have promoted the massive tax plan
by promising the tax cuts will boost the economy. Their idea is that growth
sparked by the legislation will let the tax cuts pay for themselves and not
balloon the $20 trillion deficit.
Public polling shows many Americans are unhappy with the proposal. The House
and Senate tax bills combine steep tax cuts for corporations with more modest
reductions for individuals.
The administration's rosy estimate of new revenue from the tax plan over 10
years is a lot higher than nonpartisan congressional analysts have projected.
The Joint Committee on Taxation estimates that growth stimulated by the
anticipated tax cuts will generate some $408 billion in additional tax revenue
over 10 years.
The new Treasury Department analysis says about half the expected increase
in economic growth likely will result from tax benefits for corporations. Trump
and the Republicans have insisted that businesses will use the tax savings to
invest and create new jobs.
According to the Treasury analysis, the other half of new revenue will come
from tax reductions for individuals and businesses whose profits are reported
on owners' personal income tax returns, as well as from planned administration
initiatives such as infrastructure development and a welfare overhaul.
The analysis includes an assumption that tax cuts and other administration
policies would cause the economy to expand at a 2.9 percent annual pace over 10
years. Economic growth at that level would, in theory, be enough to keep the
national debt from rising.
But most analyses have concluded that the tax overhaul would add at least $1
trillion to budget deficits in the next decade because the analyses foresee
significantly less growth resulting from the tax cuts.
Senate Democratic Leader Chuck Schumer called the administration's analysis
"nothing more than one page of fake math."
"It's clear the White House and Republicans are grasping at straws to prove
the unprovable and garner votes for a bill that nearly every single independent
analysis has concluded will blow up the deficit and generate almost no
additional economic activity to make up for it," Schumer said.
The estimates by Treasury and the Joint Committee on Taxation apply
specifically to the Senate bill. Underlining the divergent estimates, the
congressional tax committee released an analysis of the House bill late Monday
projecting sufficient growth to generate $483 billion in new revenue.
Republicans are determined to deliver the first revamp of the nation's tax
code in three decades and prove they can govern after their failure to
dismantle Barack Obama's health care law.
GOP leaders in Congress aim to iron out differences between the $1.5
trillion House and Senate tax bills to pass a final blended package.
Rep. Kevin Brady, who heads the House Ways and Means Committee and is a key
leader in the House-Senate compromise discussions, said Monday they were moving
toward a vote on the final package next week. Still, key issues appeared to
"I'm pleased with the progress we're making," Brady, R-Texas, told
reporters. "We still have work to do."
The only issue for which Brady noted a firm commitment was repeal of the
inheritance tax on multimillion-dollar estates, a benefit for ultra-wealthy
Americans. "In the House, we feel very strongly about fully repealing the
estate tax," he said.
House Majority Leader Kevin McCarthy, R-Calif., suggested Sunday that the
lawmakers may be open to adopting the Senate bill's preservation of the current
$1 million limit for the mortgage interest deduction rather than reducing it to
$500,000 as the House bill does. He also indicated a possible move to fully
eliminate the alternative minimum tax, aimed at ensuring that wealthy
individuals and corporations pay a fair share of taxes. The Senate bill retains
the AMT for corporations.
Brady said, "These are all elements that we're looking at right now."
Republican leaders have struggled to placate GOP lawmakers from high-tax
states like California, New York and New Jersey whose constituents would be hit
hard by the elimination of the prized federal deduction for state and local
taxes. Repeal of the deduction added up to $1.3 trillion in revenue over a
decade that could be used for deep tax cuts.
Lawmakers finally settled on a compromise in both bills --- full repeal of
the state and local deductions for income and sales taxes, but homeowners would
be able to deduct up to $10,000 in local property taxes.