House passes measure blocking IRS from revoking churches' tax-exempt status over political activity
Trump pitches massive tax cuts
President Trump and congressional Republicans rolled out a sweeping tax overhaul proposal on Wednesday that won immediate praise from conservatives, uniting a party that had been divided over how to repeal ObamaCare.
Business groups and the far-right House Freedom Caucus both backed the GOP blueprint to slash business taxes and trim the number of individual tax rates as Republicans looked to quickly move on from another failure to repeal the health care law.
Trump and his congressional allies are salivating for a major legislative win after a year filled with losses and disappointments, most of them related to a failed effort to repeal and replace ObamaCare. Their new hope is tax reform, which on the surface at least offers plenty for Republicans to agree upon.
Trump, seeming more at ease discussing tax compared to health care, said the framework "represents a once-in-a-generation opportunity to reduce taxes, rebuild our economy and restore America's competitive edge."
The president stressed that the benefits would go to the middle class, not the wealthy, though Democrats disputed that assertion.
"I'm doing the right thing, and it's not good for me, believe me," Trump said at an event in Indiana to sell the plan.
"This is the right tax cut and this is the right time. Democrats and Republicans in Congress should come together finally to deliver this giant win for the American people and begin [a] middle-class miracle."
The president traveled to Indiana with Democratic Sen. Joe Donnelly, who is facing a tough reelection race in a red state. He pressured the senator to back his efforts, threatening to campaign against him if he declined.
The nine-page plan calls for three individual tax rates of 12 percent, 25 percent and 35 percent, while expressing openness to an additional rate that's higher than 35 percent. The top rate is currently 39.6 percent.
The framework also would lower the corporate rate from 35 percent to 20 percent and would cut the rate for "pass-through" businesses whose income is taxed through the individual code, to 25 percent. It would also nearly double the standard deduction and would repeal the estate tax and the alternative minimum tax.
The blueprint gives Republicans a chance to turn their attention away from their failed efforts to repeal ObamaCare, a defeat in the skirmish over the debt ceiling, where Democratic leaders struck a deal with President Trump, and lack of action on Trump's border wall.
The document was widely praised by GOP lawmakers, including the leaders of the conservative Republican Study Committee and Freedom Caucus, two groups that can act as thorns in leadership's side.
"They've made a much better start than health care," said Mark Meadows (R-N.C.), chairman of the Freedom Caucus.
Freedom Caucus members had wanted to see more tax details before voting on a budget resolution that will allow Republicans to pass a tax bill with only a simple majority in the Senate.
"President Trump has delivered a forward looking tax reform framework that will let hard working Americans keep more of their money, simplify our system, end carve outs for special interests, and will help make our businesses competitive abroad," the group said.
The plan also won the backing of many outside conservative groups, some of which did not get fully on board with lawmakers' ObamaCare repeal bills, as well as business groups.
"It's definitely progress in the right direction," said Brad Close, senior vice president of advocacy at the National Federation of Independent Business.
To be sure, the plan left many details - particularly about which tax breaks to eliminate - up to the congressional tax-writing committees.
"Yes, we have a lot of work ahead, but today marks a major step forward in that process," House Ways and Means Committee Chairman Kevin Brady (R-Texas) said.
Lobbying is sure to increase as more details are made known, but the business community is supportive of the main parameters of the plan.
"There's going to be a bananas amount of advocacy once legislative language is released, but [Republicans are] doing a good job of getting people to buy into the goal," said Rohit Kumar, a former aide to Senate Majority Leader Mitch McConnell (R-Ky.) who now leads the tax policy practice at PwC.
Still, some trade groups have started pushing back against parts of the framework.
A coalition that includes state and local government groups and labor unions came out against the proposal's likely repeal of the state and local tax deduction (SALT).
"This plan is a Washington money grab that takes away the most popular tax deduction from 44 million taxpayers in all 50 states, most of them middle class," the coalition, Americans Against Double Taxation, said in a statement.
Repeal of the state and local deduction is also a problem for GOP lawmakers who represent high-tax states, such as New York and California.
"Any tax reform legislation must retain the state and local tax deductions," Rep. Peter King (R-N.Y.) tweeted. "Hard working New Yorkers must not be taxed twice."
Some business groups also expressed concerns about the framework's plan to partially limit the deduction for corporations' interest expenses.
"Interest deductibility is an essential component of businesses which rely on debt financing - companies of all sizes and across all sectors," said Mike Sommers, president of the American Investment Council, which represents the private-equity industry.
To counter criticism that the plan will largely benefit the rich, the framework leaves the door open for a top individual rate above 35 percent "to ensure that the reformed tax code is at least as progressive as the existing tax code and does not shift the tax burden from high-income to lower- and middle-income taxpayers."
Still, top Democrats blasted the effort, arguing that it would provide a windfall to the wealthy and increase the deficit. In particular, they focused on the plan's repeal of the estate tax, the increase in the bottom tax rate and the lower rate for pass-through businesses.
"This is wealth fare. Wealth fare, helping those of great wealth with more tax breaks," said Senate Minority Leader Charles Schumer (D-N.Y.).
Democrats also complained that they were not a part of the process of creating the tax framework. House Republicans met at a retreat at the National Defense University on Wednesday to discuss the plan, and Democrats had sought to be invited.
"This has been a partisan process from the start with virtually no Democratic input, as Republicans have put politics above policy and the economic security of hardworking Americans," said House Ways and Means Committee ranking member Richard Neal (D-Mass.).