Arthur Laffer, an architect of the Reagan tax plans, believes based on the last century of tax rate changes that a reduction in the corporate tax to 15 percent will juice economic growth by as much as 1 percentage point per year. "I want it to be the right kind of bill", Hatch said.
Additionally, our plan calls for the elimination of special interest tax breaks that primarily only help the well-connected and elite.
"Yet it turns out that 95% of USA businesses are not C-corporations but rather pass-throughs, which have their income "'pass-through' to their owners to be taxed under the individual income tax", according to a recent report from the Brookings Institution. By my estimate, it would raise more than $1.4 trillion in the coming decade, which could fund the following tax rate cuts and expansion of the standard deduction, while leaving federal revenue unchanged. By continuing to pair successive revenue raisers with additional cuts, tax rates can be pushed even lower and more distortions can be removed from the tax code. Ending state and local tax deduction would affect many Californians who itemize their taxes.
"As a general matter in tax reform you have to acknowledge that you can not negotiate with everybody's single pay-for", said Doug Holtz-Eakin, who runs the American Action Forum, a conservative group that's working with GOP leaders on taxes.
In line with the White House, a growing number of GOP members, such as Senator Rand Paul of Kentucky and Representative Jim Jordan of OH, have said they prefer tax cuts that would stimulate growth, even if they add to the deficit.
"I don't believe we're going to get tax reform if there is the elimination of deductibility of state and local taxes", he said. To keep the Republican majorities and grow the economy, Trump has to do one thing for voters: Show them the money. The Senate budget committee's 2018 budget resolution announced Friday lays the groundwork for a repeat of the sorry legislative process used in the failed ACA repeal. One example: House GOP leaders have pushed to allow companies to immediately write off their capital expenditures while eliminating the deductions they take when they pay interest on loans.
Republican leaders on Sunday were unable to guarantee tax cuts for all middle-class workers as a part of a tax plan that GOP leaders have pledged to produce by the end of the year. While this is definitely Reaganomics in the works - cutting taxes at the top to see employment gains at the bottom - it is only so to a degree that we may indeed see gains in employment, rather than the massive gains in wealth inequality that we saw during the 1980s. It also repeals the Alternative Minimum Tax and estate tax, which hit high earners and the wealthy, respectively.
House Speaker Paul Ryan, R-Wis., and Treasury Secretary Steven Mnuchin defended the newly released GOP tax plan as a boon for the middle class amid accusations from Democrats and some outside groups that it is primarily a chance to cut taxes on corporations and the wealthy.
President Trump and his advisors are stressing that they want tax cuts for the middle class, not high earners. "These are guys that shift paper around and they get lucky".
Across Washington, lobbyists of all stripes have been waiting for months to see tax details and keeping their powder dry until full details are revealed - suggesting that ready-made opposition awaits actual tax legislation. While lawmakers should protect tax incentives for charitable giving and savings, the myriad of other deductions, credits and exclusions should be considered fair game, starting with the state and local tax deduction.
Does this mean progressives should consider supporting Trump's trillion-dollar cuts?