Capitol Hill Republicans have greeted President Trump’s tax reform outline with a mix of lukewarm praise and restrained concern, suggesting that one of the administration’s signature agenda items is no slam dunk.
The tepid response doesn’t necessarily doom the proposal, which is extremely light on details. But it does mean that the White House has plenty of work ahead selling – and likely rewriting – the plan in order to win over enough Republican votes.
SEE ALSO:
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
p>
The outline, which is similar to what Trump proposed on the campaign trail, has many Republicans conflicted. Yes, it meets a central party tenet: Lowering personal and corporate tax rates. But many Republicans also fear that such massive tax cuts would balloon an already large federal debt, something fiscal conservatives are loath to see.
Republican leaders on both sides of the Capitol have put a positive spin on Trump’s plan, saying in a joint statement that its key points will serve as “critical guideposts” for a future overhaul of the tax code. But they’ve stopped short of an all-out embrace.
Republicans say they applaud the president’s effort but can’t fully endorse a plan that’s still a work in progress and missing key details.
“Truly at the 60,000-foot level, he’s hitting all the same things we are,” says Rep. Chris Collins (R-NY). “It’s right in line with our plan. It’s just there weren’t a lot of details to go with it.”
“We’re not going to get tax reform done if we don’t get the president engaged, and I’m glad to see the administration engaged,” says Rep. Jim Renacci (R-OH). “One thing we’ve learned is we’ve got to have consensus, we’ve got to bring people together.”
Conspicuously absent from the Trump plan is a border adjustment tax, which would give favorable tax treatment to exporters at the expense of importers. Many Republicans, including House Speaker Paul Ryan, have been pushing hard for the BAT tax as a way to help offset cuts to personal and corporate tax rates.
But Trump has never warmed up to BAT, calling it needlessly complicated. And major retailers that import heavily have pushed back against it.
Some Republicans say that while BAT has its merits, it’s time to move on. “It's my sense that its days are numbered,” says Rep. Joe Barton (R-TX).
As difficult as it’s been for House Republicans to come together on a health care bill, tax reform will be tougher because of regional variations, particularly with the president proposing to do away with deductions for state and local taxes – an idea that is under fire from lawmakers from states with high tax rates.
“I am not on board with that aspect of it, no,” Rep. Peter King (R-NY) told CNN. “My district in particular, I'm on Long Island, almost the main asset that most people have is their home. These are modest homes, but their property taxes are very high. The state income tax is very high. And so, to them, it would be a net loss in this new tax plan.”
If a plan does make it through the House, where controlling Republicans often are divided on key issues, it will face an even tougher time in the Senate, where the support of at least eight Democrats will be needed.
Both the White House and GOP leaders say they won’t rush tax reform legislation. Instead, they’ll take the next few weeks to hammer out a compromise. That will be easier said than done for this Congress. But one thing is certain: If a tax reform bill does emerge this year – and that’s a big if – it will look different from what the president proposed this week.
SEE ALSO:
p>
-
Here's How To Get Organized And Work For YourselfWhether you’re looking for a side gig or planning to start your own business, it has never been easier to strike out on your own. Here is our guide to navigating working for yourself.
-
How to Manage Risk With Diversification"Don't put all your eggs in one basket" means different things to different investors. Here's how to manage your risk with portfolio diversification.
-
AI Regulation is Looming: Kiplinger Economic ForecastsEconomic Forecasts Find out what Washington and regulators have planned for artificial intelligence.
-
The Biden Tax Plan: How the Build Back Better Act Could Affect Your Tax BillPolitics Depending on your income, the Build Back Better Act recently passed by the House could boost or cut your future tax bills.
-
Kiplinger's 2020 Election ForecastPolitics For nearly a century, The Kiplinger Letter has forecasted the outcome of presidential elections to keep readers informed of what's coming and what it means for them. Here's our call for 2020.
-
The 2020 Election and Your MoneyPolitics We’ve assessed how the presidential candidates’ stances on financial issues will affect your wallet.
-
5 HEROES Act Provisions with a Good Chance of Becoming LawPolitics The massive federal stimulus bill just passed by the House of Representatives is "dead on arrival" in the Senate. But a few proposals in the bill have enough bipartisan support to eventually become law.
-
Vote by Mail: A State-by-State Guide to Absentee Ballot VotingPolitics With health authorities recommending people continue to social distance, the idea of voting by mail is becoming an increasingly hot topic.
-
9 Ways COVID-19 Will Change the 2020 ElectionsPolitics The 2020 election will be like no other in history, as the COVID-19 pandemic will upend the business of politics as usual.
-
How to Run for Local OfficePolitics If you’ve ever thought that you could do a better job than the elected officials currently in office, here’s how to launch a campaign—and win.
