In Indiana, Trump promises 'revolutionary change' to tax code

Maureen Groppe, USA TODAY
Published 1:17 p.m. ET Sept. 27, 2017
Updated 6:01 p.m. ET Sept. 27, 2017

WASHINGTON — President Trump promised Wednesday to bring “revolutionary change” to the federal tax code that will help the middle class — and not the wealthy.

“They can call me all they want. It’s not going to help," Trump said of the well-to-do in a speech in Indianapolis. "I'm doing the right thing. And it’s not good for me, believe me.”

What would help both the country and his own legacy, Trump said, is when the economy "takes off like a rocket ship" after business taxes are dramatically cut.

The tax changes he outlined are the basis for a plan jointly agreed to with Republican congressional leaders. But Congress still has to fill in many important details before bringing to a vote legislation Trump hopes to sign before the end of the year.

The missing information will show if the plan lives up to Trump's claims, and how much the tax cuts would add to the deficit.

"Without sufficient details on how or even if these tax cuts will be fully paid for, this outline is nothing more than a fiscal fantasy," said Maya MacGuineas, head of the nonpartisan Committee for a Responsible Federal Budget.

Trump is seeking a much-needed win as he recovers from Republicans’ failure to repeal Obamacare and the loss of Luther Strange, Trump’s chosen candidate in Tuesday's Alabama Senate primary.

"This is a once-in-a-generation opportunity," Trump said of the tax plan. "I guess it’s probably something I can say I’m very good at. I’ve been waiting for this for a long time."

Trump gave what for him was a controlled speech, staying mostly on topic and avoiding such issues as the Alabama race, the NFL anthem protests, or North Korea.

And he refrained from lashing out at specific Republicans for the failure of the GOP health care bill, saying “There were a couple of people that — I won’t say anything.”

Trump plans to enlist grassroots and Democrats to sell tax plan he will call biggest in history

The proposed tax changes he promoted include slashing the individual tax rates and reducing the corporate tax rate to "below the average of other industrialized nations." That, he said, would be "a revolutionary change, and the biggest winners will be the every day American workers as jobs start pouring into our country, as companies start competing for American labor, and as wages continue to grow."

On the individual side of the tax code, working poor people could owe no income tax. Filing a return could get much simpler. And there would even be a new credit for caring for elderly relatives.

Republicans also want to eliminate two taxes paid entirely by the rich and take away a deduction for state and local taxes that is used most heavily in some of the most wealthy, and Democrat-dominated, states.

Senate Minority Leader Chuck Schumer, D-N.Y., said the framework released Wednesday “at best throws crumbs for some middle class people.”

“Has the president read his plan?” Schumer asked.

One Democrat who has said he’s willing to listen to Trump’s ideas is Indiana Sen. Joe Donnelly, who flew to the speech with the president on Air Force One.

Donnelly, one of Republicans’ best chances of expanding their narrow Senate majority in next year’s elections, was also one of only three Democratic senators who did not sign onto an August letter sent by Democratic leaders outlining what conditions must be met for the minority to support tax reform.

Most Democrats said they won’t support tax cuts for the wealthiest Americans and won’t vote for an overhaul that adds to the deficit.

Trump said tax reform doesn’t have to be a partisan issue.

But he issued a threat to Donnelly, saying if he doesn't vote for the tax plan, "we will come here and we will campaign against him like you wouldn't believe."

"I really believe we're going to have numerous Democrats," Trump said. "But they'll only do it if you, the American people, make your voices heard."

Donnelly said in a statement after the speech he needs the plan's details filled in before he can judge if workers and middle-class families will really benefit.

Robert James, president of the steelworkers union that represents Indiana workers at plants — including Carrier Corp. — which have recently laid off workers, said Wednesday the proposal won’t do anything to keep jobs in the United States.

“I don’t see it,” James said. “I don’t think this is something that benefits the people.”

Trump’s visit to Indiana is his first since going in December to announce a deal with Carrier Corp. — a company he talked about frequently on the campaign trail — to keep some jobs in Indiana instead of moving them to Mexico.

Trump chose Indiana for Wednesday’s speech in part to talk about the state’s record of cutting taxes under then-governor Mike Pence, who is now his vice president.

"Indiana is a tremendous example of the prosperity that is unleashed when we cut taxes and set free the dreams of our citizens,” Trump said.

Since 2011, Indiana has eliminated the inheritance tax, cut corporate and financial institution taxes and reduced the flat personal income tax by 5%.

"It’s the Hoosier Way, and we’re about to take it national,” said Indiana GOP Chairman Kyle Hupfer.

While conservatives have praised the cuts, some economists have seen them and the subsequent increase in Indiana's gas tax as a shift of the tax burden to Indiana's middle class.

Indiana Democratic Party Chairman John Zody said Wednesday the “historic” tax relief Pence promised Hoosiers “only added up to a paltry $50 per household last year — barely enough for one tank of gas.”

Trump highlighted how the proposal would benefit individual Hoosiers, including Kip Tom, a seventh-generation farmer who was on Trump’s agriculture advisory committee. The Tom family claims that under current estate taxes, they may have to sell off a significant amount of assets in order to pass the business to the next generation.

"Now if you don’t like your family, it won’t matter," Trump said about repealing what he called the "crushing, horrible, unfair" estate tax. "But if you like your family, it matters a lot."

Democrats say repealing the estate tax is one of the several ways the tax overhaul would benefit the wealthy, pointing out that it only affects the small portion of estates worth more than $5.5 million.

National polls show tax reform isn’t a high priority for many Americans. Only 12% of adults surveyed this month for CNN said changing federal tax law should be Congress' highest priority over the next few weeks. But most said the code either needs a complete overhaul or major changes.

The Pew Research Center has found in recent years that most Americans think they’re paying about the right amount of taxes. Their top frustration is that some corporations and the wealthy don’t pay their fair share.

Contributing: Herb Jackson, Heidi Pryzbyla, Kaitlin Lange and Tony Cook.

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