Trump Plan Said Unlikely to Back Ryan's Border-Adjusted Tax

Trump Plan Said Unlikely to Back Ryan's Border-Adjusted Tax

by Shannon Pettypiece
and Jennifer Jacobs
April 21, 2017, 2:29 PM EDT April 21, 2017, 4:45 PM EDT

Trump Says Regulatory Reduction First Step to Tax Reform

President Donald Trump’s tax plan next week likely won’t include a border-adjusted tax that House Speaker Paul Ryan has proposed, a senior administration official said.

The White House is still debating the idea, according to the official. Trump will release a tax plan for individuals and businesses next week that may not include every component that will go into final legislation, according to a different senior White House official.

The plan -- which Trump said will be released Wednesday -- will contain the administration’s priorities, said one of the officials. Both asked not to be identified because discussions of the plan are private.

Ryan has proposed replacing the 35 percent corporate income tax with the 20 percent border-adjusted tax on U.S. companies’ domestic sales and imports. Exports would be exempt under the plan, which is opposed by retailers, carmakers and oil refiners that rely on imported goods.

White House Budget Director Mick Mulvaney, in an interview with Bloomberg Television, provided few details of Trump’s plan, saying it’s aimed at providing 3 percent annual growth. “We’re trying to backfill from there,” he said -- by incorporating tax policy that would provide for that ambitious growth target. A Bloomberg survey of 73 economists in April showed the median forecast for U.S. economic growth in 2017 is 2.2 percent.

Mulvaney also raised the possibility that the plan might not be revenue-neutral -- meaning that it might provide for only temporary tax cuts that would have to expire after 10 years.

“Deficits are not driving the discussion,” he said.

The Associated Press reported Friday that Trump said the plan will result in “massive” tax cuts for both individuals and businesses. The cuts will be “bigger I believe than any tax cut ever,” he said, according to the AP report.

Later, while signing an executive order related to a broad review of tax regulations from 2016 and 2017, Trump said he wants Treasury Secretary Steven Mnuchin “to begin the process of tax simplification.”

‘Phenomenal’ Plan

Trump, who campaigned on large tax cuts for businesses and individuals, had said on Feb. 9 that he would be releasing a “phenomenal” tax plan to overhaul the tax code within two to three weeks. The word that he’ll release a plan next week comes as he approaches the end of his first 100 days in office on April 29.

Reaction in Congress, which returns from a two-week recess next week, was muted. Senate Majority Leader Mitch McConnell’s office referred questions to the White House.

But the Senate Finance Committee has yet to see final details of a White House plan, a congressional aide said Thursday. And tax-related challenges presented by the 2010 Affordable Care Act remain in place amid Republicans’ disagreement on how to dismantle the health-care law they’ve criticized for years. Mulvaney repeated Friday that Trump would like to see health-care legislation tackled first -- because it could help pave the way for larger tax cuts overall.

In the House, where any tax legislation would have to begin, “our intention has always been and continues to be to coalesce around a unified GOP plan and those conversations continue,” said AshLee Strong, a spokeswoman for House Speaker Paul Ryan.

Border-Adjusted Tax

Mulvaney said only that Trump’s position on the border-adjusted tax is still under discussion. He said administration officials are grappling on how well that portion of Ryan’s plan would contribute to economic growth. The border-tax concept is estimated to raise more than $1 trillion in revenue over 10 years; without that, it may be difficult for any plan to achieve revenue-neutrality.

Revenue neutrality is important, because the GOP controls just 52 of the Senate’s 100 seats., and normal Senate rules impose a 60-vote threshold for legislation to escape potential filibusters from opponents. Senate Republicans could use a process known as budget reconciliation, which would allow for passing a tax bill with a simple majority. But under that process, any legislation that added to the deficit would have to be set to expire after 10 years.

Steve Rosenthal, a senior fellow at the Urban-Brookings Tax Policy Center and a former legislation counsel at Congress’s Joint Committee on Taxation, said Trump’s announcement “almost certainly” signaled that he was abandoning permanent tax reform in favor of temporary tax cuts that would expire in 10 years.

“We will end up with ‘tax cuts for everyone,”’ Rosenthal said. “You just use fantasy scoring. It’s much easier than tax reform and revenue neutrality.”

https://www.bloomberg.com/politics/a...ming-next-week

Quote:

---

Border-Adjusted Tax

Mulvaney said only that Trump’s position on the border-adjusted tax is still under discussion. He said administration officials are grappling on how well that portion of Ryan’s plan would contribute to economic growth. The border-tax concept is estimated to raise more than $1 trillion in revenue over 10 years; without that, it may be difficult for any plan to achieve revenue-neutrality.

---

If it raises $100 billion a year in new taxes on corporations and US businesses, then this tax hurts our economy. It's a 25% to 30% increase in taxes on our employers. No wonder the US Chamber is against it. It doesn't lower the corporate and business rate, it increases it.

These are bad ideas that come from "policy wonk" like Paul Ryan who has never worked in business.

What he's trying to do incorrectly is what the FairTax does correctly. You don't tax the company like Paul is trying to do, you tax the consumption, one-time, at the final point of sale. And you don't just eliminate the corporate income tax, you need to eliminate the entire income tax, then by taxing consumption (new goods and services), you tax imports the same as domestic sales, which levels the playing field and "border adjusts" between domestic production and imports because everyone is subject to the same tax, and by eliminating the entire income tax code for everyone, you achieve revenue neutrality, which means no new taxes, except through economic growth and increased consumption which is what will happen when you pass the FairTax. The border adjusted tax would indeed raise prices whereas the FairTax doesn't, because the FairTax shifts all this convoluted income tax collection from all types of different sources and entities to a one-time simple collection from one source, the final purchase of the new item or service.

Give it another name, if you're afraid of the Anti-FairTax Lobby, call it the "Consumption Tax", "you want it, you pay for it." Very simple.

Trump's team is considering a controversial plan that could make his promise to cut taxes harder to keep

Bob Bryan
Apr. 19, 2017, 4:03 PM 10,327

The Trump administration is considering a major shift to tax deductions, new reports have suggested, in a move that could make it even harder to pass tax reform.

According to Axios' Jonathan Swan, Trump's top economic adviser and former Goldman Sachs executive Gary Cohn is "warming" to a plan that would eliminate the ability to deduct state and local taxes from federal tax returns. This plan has long been favored by conservative groups.

But the move would likely be a deal breaker for many Democrats and even some Republicans, potentially hampering any bipartisan cooperation on the tax overhaul.

The deduction

Currently, the money Americans pay toward some state and local taxes can be taken as a deduction from their federal return, lowering their overall tax bill. Itemized filers can subtract the cost of state and local sales, property, and income taxes for their federal returns.

Based on an estimate by the Congressional Budget Office and Joint Committee on Taxation, the deduction could cost roughly $1.3 trillion in forgone revenue to the federal government between 2017 and 2026. In 2017 alone, the JCT and CBO said, the federal government will miss out on $96 billion.

The two largest beneficiaries of his deduction (also called the SALT deduction), according to the Tax Policy Center, are higher earners and certain states with a lot of high-income residents.

"About 10 percent of tax filers with incomes less than $50,000 claimed the SALT deduction in 2014, compared with about 81 percent of tax filers with incomes exceeding $100,000," said the analysis from the Tax Policy Center. "The latter group, which made up about 16 percent of tax filers, accounted for about 75 percent of the total dollar amount of SALT deductions claimed. The average claim in this affluent group was of about $12,300."

Most of the claimants that benefit from the SALT deduction live in traditionally Democratic states, primarily California and New York. Those two states receive around 30.5% of the total benefits from the deduction, according to the Committee for a Responsible Federal Budget.

According to Bloomberg's Sahil Kapur, many conservatives are in favor of eliminating the deduction, including tax reform advocate Grover Norquist, the Club for Growth, and the Heritage Foundation.

Why it could be helpful for Trump's tax reform

Trump's team and the GOP have advocated for deficit-neutral tax reform — meaning that in order to slash the tax rate for corporate and middle-income Americans, revenue would have to be made up in other ways.

Eliminating the state and local deduction would seem like an attractive option. It hits high-income Americans primarily in states that did not vote for Trump in the election and fulfills Trump's promise to fill tax loopholes to finance his cuts.

According to Axios, the White House said it is "still in listening mode, hearing from key stakeholders" on any aspects of a tax plan.

The political reality

Though it may be popular among certain segments of the GOP, there are several problems with its potential inclusion in a final package.

For one thing, Trump officials have suggested that they want to bring forward a bipartisan tax reform plan, and this move would threaten alienating blue states.

And some more Republican-leaning states have a larger number of SALT deduction beneficiaries and lawmakers from those areas could also be against the change. Texas, Tennessee, and Florida benefit significantly from the ability to deduct sales taxes since they have no income taxes.

Taking away the deduction could set up another intra-party divide for Trump between states that rely more heavily on the deduction and those that do not.

Such a situation would shape up similarly to the problems that faced the American Health Care Act in March: Democrats across the board fighting against the plan and a subset of Republicans against the provision, making it a potential political landmine.

http://www.businessinsider.com/trump...ry-cohn-2017-4

No, this won't work either. You can't remove those deductions, that's the housing market, that's commercial and industrial facilities, that's state government. Oh puleeze.

Look guys and gals, this game you're trying to win has been tried every year for 104 years since passage of the income tax and it has failed every single time. Yes, you boys are bright, some of the brightest minds in the country, but not even you, not even Trump, can turn a gator into a rose. There is no way to come up with a "phenomenal" income tax plan. You can not take 77,000 pages of pure puke, veritable vomit, and turn it into chicken soup to heal our poor beleaguered economy. You have to kill the gator and flush the puke and vomit.

That means you abolish this sickness called the income tax and replace it with a simple national retail sales tax on new goods and services, a consumption tax, to fund our government, Social Security and Medicare. Earmark the rate portion for SS and Medicare so it goes straight into SSA, the rest to the Treasury Department. The retail businesses collect it just as they do in 45 states when they collect state sales tax, pay them a % fee for their service, have them send it to the states on the same form they report and transmit state sales taxes, have the states enforce same as they do for their own tax, and pay them a % fee for their service. For the 5 states that don't have sales tax departments, they can either form one and do it for the fee, contract with another state to do it for them, or the feds will set it up in those states and do it for them.

There's already a nice, neat, tidy little bill that sets this all up for you. It's in the Ways and Means Committee, just waiting to be endorsed by Trump, Mnuchin, Mulvaney and Cohn.

SOMEONE FROM THE FREEDOM CAUCUS, PLEASE SEND THEM A COPY OF THIS BILL, it's HR 25 in the US House of Representatives and S 18 in the US Senate, just waiting for the White House nod, a vote out of the Ways and Means Committee and a 15 minute roll call vote in the US House of Representatives. That puts the Burden on the US Senate to explain to 300 million Americans why setting them free from the puke of the income tax isn't good for them. It will be comical, honestly. Let Schumer be the one. Priceless. The most fun you'll ever have as President, my dear Donald Trump. GO FOR IT. It's time to lead. This is how you "drain the swamp."

Trust me, THAT BILL all written and ready to go, IS your "phenomenal" tax reform plan, and the only one that will ever cross your desks in your lifetimes. Seize it or admit defeat like everyone else who for 104 years has tried to 'fix" the income tax plan. There was a reason why the income tax was prohibited by the US Constitution, and $20 trillion of national debt, with 70,000 closed factories, 94 million Americans out of the work force and $800 billion a year in trade deficits later, people should understand "clear as crystal" why it was illegal to begin with.