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Tax Policy

Trump, GOP Congress discussing new round of tax cuts for possible September vote


By —— Bio and Archives--July 18, 2018

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Trump, GOP Congress discussing new round of tax cuts for possible September vote
If they could get it done, it would be a boon to an already accelerating economy and a boost to their already growing chances of holding the House and building their majority in the Senate.

As a practical political matter, it’s how to see how they get it done, considering that their Senate majority is arguably less than a thread. But a groundswell of public demand for the idea might be enough to bring the usual reluctant Republicans along for the ride, so they’re already talking about what they might do. And it’s ambitious by the standards of today’s political norm, even if it’s not the radical overhaul some of us would really like to see:

Brady said that making the tax cuts for families and small businesses permanent is “important for growth and certainty.”

Additionally, Brady has said the GOP can do even more to boost paychecks. Under the Tax Cuts and Jobs Act, the Council of Economic Advisers estimates that annual income for American households will increase in the long run by $4,000 on average.

While the GOP slashed the corporate tax rate by 14 percentage points, to 21% from 35%, under the Tax Cuts and Jobs Act, an even bigger reduction could be on the way.

“One of the things I’m thinking about is bringing the 21% [corporate tax rate] down to 20%,” Trump told FOX Business, adding it would provide “great stimulus.”

Brady said if other countries keep lowering their tax rates, the U.S. will keep pace, adding that the Trump administration wants to make sure the country never again falls behind “like it did for the last 31 years.”

Before the tax overhaul, the U.S. had one of the highest corporate tax rates among countries in the developed world.

A May report from Northwestern Mutual found that 21% of Americans have no retirement savings at all, while two-thirds of people with a savings account or plan are certain their funds will run dry too soon.

The administration hopes it can help change that with its second round of tax legislation.

“We are looking at ways where it’s easier for families to save earlier in life and more over time, whether it’s for health care or for retirement,” Brady said. “We think America is not a nation of savers; we want it to be.”

Brady did not go into specific details as to what Republicans plan to do to help more Americans stash away a larger percentage of their income, but Rep. Kenny Marchant, R-Texas, told The Wall Street Journal that a universal savings account could be included. Contributions into a universal savings account would be taxed, but earnings would grow tax-free and would be easier to withdraw than a traditional 401(k) or other retirement account.

Further, the bill could aim to make it easier to use health savings accounts (HSA), an account where an individual contributes pretax dollars for the explicit purpose of spending those funds on future medical expenses.

I can’t help but notice that all the activity here is coming from the House, and that it’s led by Kevin Brady, who wants to be the new Speaker when Paul Ryan has moved on next year and Republicans hopefully still have a House majority. It’s not hard to see the House passing a bill like this, but the road to Senate passage is extremely rocky.

 

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Not only do you have to hold together a very fragile Republican majority, you also have to deal with Senate budgeting rules that regard almost every tax cut as a deficit-exploder even if it really isn’t, and make all kinds of thing subject to filibusters.

The Senate leadership is notoriously cautious, and will fret that they’d get beaten up by the media over yet another “tax cut for the rich.” If Republicans think they can stop that charge by making the bill “targeted at the middle class,” then they don’t know very much about how the political press operates. They don’t care what’s in the substance of the bill. They will parrot Democrat talking points because that’s what they do.

And remember, last year’s tax cut is gaining popularity now as the economy is improving, but at the time it was passed, it was actually unpopular because the media had convinced so many people who were actually getting tax cuts that they were going to pay more. They will do the same this time, and that will scare nervous-Nellie Republican senators against voting for such a bill with mid-term elections looming.

I’m not saying it can’t be done. I’m simply going through the obstacles, and they are formidable. If they can be overcome, the nation will be better off.


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Dan Calabrese -- Bio and Archives | Comments

Dan Calabrese’s column is distributed by HermanCain.com, which can be found at HermanCain

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