In Indianapolis on Wednesday, President Donald Trump unveiled the GOP tax reform framework that calls for tax cuts and a simplification of the tax code. He said, "This is a once-in-a-generation opportunity, and I guess it's probably something I could say that I'm very good at." Trump said, "I've been waiting for this for a long time. We're going to cut taxes for the middle class, make the tax code simpler and more fair for everyday Americans. And we are going to bring back the jobs and wealth that have left our country and most people thought left our country for good." A number of conservative think-tanks and advocacy groups, such as the CATO Institute and Americans for Tax Reform, praised the package, while Americans For Fair Taxation said that reform merely helps the inhabitants of "the Swamp."
Trump called for dropping the number of personal income tax brackets from seven to three (12 percent, 25 percent and 35 percent), doubling the standard deduction for married and single filers (to $24,000 and $12,000 respectively), slashing the corporate tax rate to 20 percent, eliminating the estate tax, among other proposals.
Here follow the responses of several think-tanks and organization that have called for tax reform:
Americans for Fair Taxation
AFFT Chairman and President Steve Hayes, a veteran advocate of the Fair Tax concept, wrote that the proposed tax reform “protects the Swamp.” He wrote, “The tax reform proposal that is supposed to make all of us believe that the Swamp inhabitants have actually tried to do something for us is now public. To be fair, many of the proposals will improve the present income tax code--if they are passed and remain in place for longer than this term of Congress.”
In his newsletter, Hayes summarized key aspects of the tax reform proposal:
“Reduces the number of individual tax brackets from seven to three with rates of 12 percent, 25 percent and 35 percent, with the proviso that a higher rate can be added for wealthy taxpayers but does not define ‘wealthy."
“Increases the standard deduction from $6,350 to $12,000 for individuals and from $12,700 to $24,000 for married couples but eliminates the deductions for personal exemptions.”
“Increases the amount of the child tax credit.”
“Eliminates all itemized donations except for mortgage interest and charitable contributions.
“Repeals the estate tax and the alternative minimum tax.
“Lowers the corporate tax rate from 35 percent to 20 percent.
“Lowers the top rate on income for so-called “pass-through” businesses to 25 percent.
“Allows businesses to immediately write off 100% of the costs of their capital investments for at least five years.
“Limits a business’ ability to deduct interest expenses.
“Delegates to the tax-writing committees the duty to decide which business tax breaks to eliminate, but calls for the preservation of the research and development tax credit and the low-income housing tax credit.
“Signals a move to a 'territorial' system that doesn’t tax dividends from U.S. companies’ foreign subsidiaries.
“Requires a minimum tax on foreign profits at a reduced rate to ensure that companies that use tax havens pay at least a certain level of taxes on a global basis.
“Includes a one-time tax on the foreign earnings that U.S. companies currently have held overseas. There would be two repatriation rates: one for cash and cash equivalents and a lower rate for other types of assets. The numbers for the rates aren’t specified.”
Hayes wrote that the “‘reform’ proposed by the Swamp” is no reform at all. Likening the reformers to a dentist who treats a patient’s infected tooth with a painkiller rather than treating the decay in the tooth. “Because the actual cause was not repaired,” he wrote, “the tooth just gets worse and the patient will either lose it or the infection could spread into the body and have even worse consequences.”
Hayes went on to cite why the tax proposal actually helps “the inhabitants of the Swamp.”
“Eliminates deductions for most special interests and ensures that huge amounts of money will be spent to change the bill. Winner: Swamp
“Maintains the present income/payroll tax system. Winner: Swamp
“Keeps the IRS in place. Winner: Swamp
“Keeps the corporate tax and its complexity. Winner: Swamp
“Requires complicated business tax returns. Winner: Swamp
“Can be changed behind the scenes if the money is right. Winner: Swamp
“Ignores the growing evasion of at least $9 trillion over the next decade. Winner: Cheats”
He concluded: “The only true tax reform is the FAIRtax because only it accomplishes all of the tax reform goals promised by the Swamp inhabitants. We have to send a strong wake-up call to the inhabitants of the Swamp that we are on to their games and if they don't change, we will elect people who really care for us--not just for themselves and their friends.”
Americans for Tax Reform
ATR president Grover Norquist told Fox News “Fox and Friends” program that Democrats must admit that their policy of higher taxes has hurt the economy over the years. They must also admit, he said, that tax rates must be brought down to enable the national economy to compete internationally. However, he predicted that Democrats will not vote for the tax reform package being offered by President Trump and congressional Republicans.
He said, "Once we have 51 votes in the Senate, there may be three or four Democrats who are terrified of losing in the 2018 election." He said, "They would throw a vote in but they would not be the fiftieth or fifty-first vote which means their vote doesn't matter because it's just pretending." Norquist added, "There will be no meaningful Democrat votes for the bill." Not a “single Democrat” in either the House or Senate will vote for the bill, he said. Indeed, Senate Minority Leader Charles Schumer (D-NY) has already signaled the direction Democrats will take by saying that he does not support the bill.
Norquist said he believes that the president’s call for tax relief is the beginning of forthcoming action on the issue. He said, "We had a tax cut every year that we had a Republican president and a Republican congress under [President George W.] Bush," Norquist said. "Republican states like Florida and Texas and North Carolina you have a tax cut every year. With Trump, as long as there is a Republican House and Congress, there will be a tax cut every year. This is going to be a larger one. It's going to be dramatic."
In the coming two years, Norquist said, "there will be things that we weren't able to fit into this tax bill that will get into the next one." Norquist continued, saying that Trump’s plan will help people who have not been employed in the past eight years. "We were growing at two percent a year and we had lousy job numbers," said Norquist. "The winners of this are the millions of Americans who will get a job because we're bringing trillions of dollars overseas back to the United States. We're reducing taxes on businesses, so they can invest in people, and making people more productive rather than sending the money to Washington, D.C.”
Norquist claimed that the biggest winner in the GOP tax plan "is the guy who had no job and now makes $30,000 or $40,000 or $50,000 a year. It benefits every American because every single American will see a tax rate reduction."
Wayne T. Brough - chief economist of Freedom Works -- wrote at The American Spectator:
“With the Obamacare fight all but over, all eyes have turned to tax reform. This week, President Trump unveiled the “Unified Framework for Fixing Our Broken Tax Code.” That’s good news for taxpayers, consumers, and businesses. The current tax code is burdensome and inefficient and thwarts efforts to revitalize the economy. The new plan for reform includes an overhaul that makes the tax code simpler, fairer, and flatter. The plan touts benefits to the middle class, small business, and the economy as a whole. This is a fundamental upgrade from the current tax code, which is collapsing under the weight of all the loopholes and carve-outs that have been piled on over the years. The proposed tax plan is an attempt to clear out the underbrush and create a new tax code based on economic common sense rather than political expediency.”
“The plan has something for all taxpayers, and the current seven tax brackets are simplified to just three: 12 percent, 25 percent, and 35 percent. To ensure that lower income families are held harmless with the elimination of the 10 percent tax bracket, the plan also doubles the standard deduction and boosts the child tax credit. While the mortgage interest deduction and charitable deduction remain, the goal is to close as many other loopholes as possible. Gone also is the death tax, an inefficient tax that raises little revenue. And for added simplicity, the Alternative Minimum Tax is also eliminated.
Stephen Moore of Freedom Works, an adviser to President Trump, wrote an op-ed at CNN, saying, “The White House and congressional Republicans have released their tax plan that President Donald Trump boasts would be ‘the biggest tax cut since Reagan.’
“The only question is why has this taken so long? The new plan is not much different from the one that Trump campaigned on -- and that economist Larry Kudlow and I helped draft for then-candidate Trump. This tax cut should already be the law of the land.
“Employers, investors and workers are counting on Republicans delivering this economic stimulant before the end of the year
“The lower rates on businesses -- 20% for corporations and 25% for most small businesses -- would almost certainly incentivize more hiring, higher wages and more capital investment. Chopping our corporate tax rate nearly in half would bring capital, jobs and businesses back home to all of the states. What better way to shake the rust off the Rust Belt?
National Taxpayers Union
In a statement, the president of the National Taxpayers Union referred to the so-called The Big Six — which includes the top House and Senate leaders, the chairmen of the two chambers' tax-writing committees, Treasury Secretary Steven Mnuchin, and National Economic Council Director Gary Cohn, and the tax reform package announced by the president.
NDU president Pete Sepp stated:
“For overburdened taxpayers, the wait is over – Congress and the President are not only reading from the same book on tax reform, they’re now getting on the same page.
“The core tax reform principles they’ve outlined in today’s framework can deliver on relief for middle-class families and individuals, a simpler filing process, a fairer system that allows all businesses to create more jobs, and ultimately a prosperous economy. By lowering rates, broadening the tax base, getting rid of nuisances like the death tax and Alternative Minimum Tax, expanding the standard deduction, giving businesses of all sizes pro-growth tax tools, and enhancing our competitiveness abroad, the framework gives Congress the solid foundation it needs to legislate.
“In short, we have the best opportunity in more than three decades to transform our antiquated tax code for the benefit of everyone.
“The task ahead is not easy, and public officials are about to be besieged by thousands of special interests who say it can’t be done. The naysayers should not be allowed to deter progress any longer. The reality is if Washington stands still on tax reform, America will fall further behind.
“Other nations will continue to improve their tax systems, economic opportunities will keep leaving our shores for less punitive tax climates, loopholes will proliferate, and the costs of complying with our tax system will worsen. Everyone who cares about America’s future must unite now on behalf of tax reform, and today’s framework has shown us how we can do so.”
American Legislative Exchange Council:
CEO Lisa B. Nelson of ALEC said in response to the tax proposal, “Just as President Ronald Reagan lifted the United States economy from the economic doldrums, President Donald Trump’s framework for fundamental tax reform will unrig the tax code and bring economic growth that America’s taxpayers so desperately need.” She added, “We need to lower tax rates on job creators and the tax reform outlined by President Trump and congressional leaders is going to do that for businesses and hardworking taxpayers across the board.” Joel Griffith, Director of the Center for State Fiscal Reform, said: “The tax proposals unveiled by Congress and the White House this week will accelerate economic growth by incentivizing entrepreneurship and investment. Reducing the highest business tax rate in the industrialized world and eliminating some of the favoritism riddling the tax code will benefit all income levels as opportunities multiply.” Joel Griffith, Director of the Center for State Fiscal Reform Director explained.
CATO Institute analyst Chris Edwards wrote that the Republican tax reform framework has few surprises, incorporating “pro-growth” provisions.
“Cutting the corporate tax rate from 35 to 20 percent.
“Cutting the top rate for businesses that pay under the individual code from 40 to 25 percent.
“Expensing business equipment purchases.
“Replacing the worldwide corporate tax system with a territorial system.
“Repealing the estate or death tax.
“Repealing the individual and corporate alternative minimum taxes.
“Simplifying the individual tax rate structure to 12, 25, and 35 percent.
“The other main tax cut in the plan is a doubling of the standard deduction, which would not do much for growth but would simplify the system.”
Stating that high-earners, such as investors, business executives, physicians, and other highly skilled individuals, “generally add more to economic growth than other taxpayers,” Edwards said that the “highest tax rates that do the most economic damage.” He added, “Indeed, tax damage rises rapidly as tax rates rise. If Congress is going to cut any individual tax rates, it should cut the highest rates.” The most important goal now is a cut to the corporate tax rate. “On the whole,” he wrote, “the GOP is on the right track.”