Trump Continues To Make It Impossible For Congressional Republicans To Govern
Even GOP corporate whores in Congress think Trump's push to cut corporate taxes from 35% down to 15% is insane and potentially extremely damaging to the economy. It would send the national debt into the stratosphere. Since this kind of thing can't be passed under reconciliation, Trump would need all the Senate Republicans and a handful of Democrats to get this passed, even if it manages to pass the House. Ryan is trying to help by offering to use a border adjustment tax (BAT) to raise a trillion dollars but even that isn't enough and not even Trump likes the tax. Club For Growth is on the warpath over it already and has been targeting Republican congressmembers who back it. Look at this ad they're running in Houston against vulnerable GOP doofus John Culberson:
Yesterday the Washington Post reported that Congress' Joint Committee on Taxation found that even Ryan's plan to cut the corporate tax rate to 20% would lead to massive revenue losses-- in the realm of nearly half a trillion dollars. The Joint Committee found that "cutting the corporate tax rate from 35 percent to 20 percent in 2018, 2019 and 2020 would lead to a decline in tax revenue collected those years by roughly one-third. And tax receipts would continue falling-- albeit only slightly-- in subsequent years, in part because companies would rush to repatriate money they are holding overseas during the tax holiday. The result would be reduced taxes on those foreign profits in future years."
While Ryan and other House Republicans are advocating a reduction in the corporate tax rate to 20 percent, President Trump wants the corporate rate lowered to 15 percent, which would lead to an even bigger drop in revenue, although the committee did not provide an estimate for such a change. The White House is expected to reveal more details of its tax plan Wednesday.The bullshit artist in the Oval Office is using the oldest trick in the book-- long discredited-- to pull the wool over everyone's eyes, claiming that his "proposed tax cuts would not lead to an increase in the deficit, because they would lead to a boom in economic growth, creating new tax revenue. But when congressional budget scorekeepers evaluate the bill, they won't use that growth assumption to determine whether the legislation will expand the deficit. Trump administration officials have also said lowering the corporate tax rate will create new incentives for companies to bring jobs back to the United States, and they have said it will also lead companies to bring trillions of dollars being held overseas back to their U.S. headquarters."
“We note that we project a nonnegligible revenue loss in the tax years immediately following the budget window notwithstanding the temporary nature of the tax reduction,” says the letter, which was signed by Thomas Barthold, the Joint Committee’s chief of staff.
The letter illustrates how even a temporary cut in the corporate tax rate could create major revenue challenges. It also shows how difficult it would be for Republicans to pass long-term changes to the tax code. Under Senate rules, a permanent tax cut that is expected to expand the deficit needs 60 votes to pass-- a major obstacle for Republicans, who control only 52 seats in the chamber. Without 60 votes, Republicans would be able to pass only temporary tax cuts, and the three-year cut referred to in the Joint Committee’s letter probably would not qualify, because of the reductions in taxes in later years.
Progressives in Congress saw right through Trump's little kindergarten tricks. Ted Lieu: "I can explain in one word why the Trump tax plan and Trumpcare are both disasters: math. No matter how hard the President and Republicans spin it, 2 + 2 will never equal 5... Despite this mathematically impossible spin, a cold, hard fact remains: the Trump tax plan does not pay for itself. It doesn’t even come close. America is a great nation, but we haven’t yet discovered magic. In the real world, the rules of math always apply. Instead of paying for itself, the Trump tax plan-- particularly it’s slashing of the business tax rate to 15% without offsetting revenue increases-- will blow a 'bigly' hole in our nation’s budget, federal deficit and federal debt."
The House Republican plan, which seeks a 20 percent tax rate, includes changes to the corporate tax structure that would raise taxes on imports. This change, frequently called a “border adjustment tax,” would bring in roughly $1 trillion in new revenue over one year, according to estimates. The committee's letter did not factor in the potential new revenue that could come from a border adjustment tax.Julie Davis and Alan Rappeport warned NY Times readers this morning that the Regime's tax plan was written for billionaires-- and especially for family companies like... the Trump Organization. There is a a modest cut for middle-income people in the form of a small increase in the standard deduction for individuals but it puts off "the difficult part of a tax overhaul: closing loopholes and increasing other taxes to limit the impact of tax cuts on the budget deficit."
The Trump administration has not said what types of new tax changes it might seek to offset the big drop in revenue from rate cuts.
The conservative-leaning Tax Foundation, a think tank, has estimated that it would take substantial economic growth to offset Trump's proposed 15 percent corporate tax rate, something it estimated was not achievable without other changes. For example, it projected that the tax cuts would have to lead to an increase in annual gross domestic product by 0.9 percent per year to create enough revenue to offset the cuts. Rather, it estimates that the cut would lead to an increase in annual growth of 0.4 percent.
Republicans are likely to embrace the plan’s centerpiece, substantial tax reductions for businesses large and small, even as they push back against the jettisoning of their border adjustment tax. The 15 percent rate would apply both to corporations, which now pay 35 percent, and to a broad range of firms known as pass-through entities-- including hedge funds, real estate concerns like Mr. Trump’s and large partnerships-- that currently pay taxes at individual rates, which top off at 39.6 percent. That hews closely to the proposal Mr. Trump championed during his campaign.
But Mr. Trump’s decision to extend the corporate tax cut to real estate conglomerates like his own will give Democrats a tailor-made line of attack.
“Yesterday, we learned President Trump wants to slash the corporate tax rate, even though corporations already dodge most of their tax responsibilities while making record profits,” said Frank Clemente, executive director of the liberal Americans for Tax Fairness. “Today, we find out it’s even worse. In trying to slash taxes for ‘pass through’ business entities, Trump is seeking to dramatically reduce his own tax bill.”
...[F]inding ways to offset the large revenue reductions envisioned in the blueprint would be a challenge... The border adjustment tax may be revisited later but was considered too controversial to include now.
...Most analysts say the notion that Mr. Trump’s tax cuts will pay for themselves is unrealistic. A Tax Foundation analysis concluded this week that, on its own, a 15 percent corporate tax rate would reduce federal revenue by about $2 trillion over a decade. To make up for those losses without raising taxes elsewhere, the economy would have to become 5 percent larger.