Trump inches closer to Ryan on taxes

Trump inches closer to Ryan on taxes
© Greg Nash

Donald TrumpDonald John TrumpFeinstein, Iranian foreign minister had dinner amid tensions: report The Hill's Morning Report - Trump says no legislation until Dems end probes Harris readies a Phase 2 as she seeks to rejuvenate campaign MORE is inching closer to Speaker Paul RyanPaul Davis RyanAmash storm hits Capitol Hill Debate with Donald Trump? Just say no Ex-Trump adviser says GOP needs a better health-care message for 2020 MORE’s (R-Wis.) positions on taxes with the economic platform offered on Monday.

In a speech at the Detroit Economic Club, Trump said he would use the individual income tax brackets of 12, 25 and 33 percent that are part of the “Better Way” agenda House Republicans offered in June.

It’s a significant shift for Trump, who last year proposed rates of 10, 20 and 25 percent.

The Republican presidential nominee also said businesses would be able to immediately deduct the cost of their investments, a key feature of the House GOP plan that also was a part of rival tax plans offered by several candidates Trump defeated in the Republican primary.

The moves by Trump were particularly notable coming after a week in which he at one point refused to endorse Ryan in his primary, saying he “wasn’t there yet.” The language mimicked Ryan’s own words earlier this spring when he did not immediately endorse Trump as the GOP presidential nominee. Ryan is favored to win his primary on Tuesday.

Even in his language on Monday, Trump seemed to be emphasizing the need for unity.

While he said that he and congressional Republicans would sometimes disagree, “we will be focused on the same shared goals and guided by the same shared principles: jobs, growth and opportunity.”

Republican strategists offered support for Trump’s plan and the signal it sent about getting the GOP on the same page.

“The last 10 days have been brutal for the Donald Trump campaign and this tax plan is a chance for him to right the ship,” GOP strategist Ron Bonjean said.

Several polls have shown Trump falling behind Democrat Hillary ClintonHillary Diane Rodham ClintonHarris readies a Phase 2 as she seeks to rejuvenate campaign Nevada Senate passes bill that would give Electoral College votes to winner of national popular vote 2020 Dems break political taboos by endorsing litmus tests MORE nationally and in battleground states.

With less than three months to go before Election Day, it is critical for Trump to bolster GOP support for his campaign. Some Republicans have long talked about the possibility of abandoning the presidential race to shore up House and Senate candidates, something that would hurt Trump.

Trump throughout his unconventional campaign has shown a willingness to toss aside GOP orthodoxy, particularly on trade.

In his speech on Monday, the business magnate again ripped the Trans-Pacific Partnership trade deal backed by Clinton.

But there was plenty for business-friendly Republicans to like about Trump’s speech as well.

Ryan Ellis, a senior fellow at the Conservative Reform Network, said “the House Republican plan in many ways reflects a consensus in the tax community on the Right.”

Trump is trying to show that he has “smart, responsible policies” instead of just live-tweeting his gut feelings, Bonjean added.

Conservative tax reform advocates said that the fact that Trump and House Republicans are in line on taxes increases the chances that an overhaul of the tax code would be enacted if Trump were elected president.

The commonalities between Trump and Ryan on taxes “makes the whole tax plan infinitely more real and tangible,” said Grover Norquist, president of Americans for Tax Reform.

House Ways and Means Committee Chairman Kevin BradyKevin Patrick BradyDemocrats seize on IRS memo in Trump tax battle Oil companies join blitz for carbon tax Microsoft, other business leaders head to Capitol Hill in support of carbon tax MORE (R-Texas) said in a statement that “Mr. Trump's support for key features of the House Republican tax blueprint plan makes me optimistic that we can work together to move our economy into the lead and improve the lives of Americans for the long term."

While the economic policy speech is the “first step in the right direction” for Trump, people may not be won over by just one speech, Bonjean said.

“I think they’re going to reserve judgment until they see a few weeks under his belt of responsible, consistent behavior,” he said.

Clinton and her allies blasted Trump’s approach.

Gene Sperling, the former director of the National Economic Council, argued Trump’s plan would help the wealthy at the expense of the poor.

“It’s a doubling down on probably the parts of his tax cut that will most contribute to economic inequality,” he told Fox Business on Monday.

Trump’s new plan would also add less to the budget deficit — another possible step toward Ryan and congressional Republicans.

The conservative-leaning Tax Foundation estimated that Trump’s original plan would cost about $12 trillion without taking into account economic growth and $10 trillion over a decade under “dynamic scoring” that considers the plan’s economic effects. 

The Tax Foundation estimated that the House GOP tax plan would only cost about $2.4 trillion over 10 years without accounting for economic effects and $191 billion in its first decade under dynamic scoring.

Kyle Pomerleau, director of federal projects at the Tax Foundation, said that by increasing the individual tax rates from his original proposal, Trump is likely reducing the cost of his plan by a few trillion dollars.

However, Trump’s plan is still likely to cost trillions of dollars and is not yet close to being revenue-neutral, Pomerleau said.

In addition to adopting the House GOP individual tax rates and calling for full expensing of investments, the real estate tycoon proposed a deduction for childcare costs.

This idea is not included in the House GOP blueprint and drew criticism from tax experts. They said that depending on how the deduction is designed, low-income families are unlikely to actually be able to benefit from it.

Trump also highlighted tax proposals that were part of his original plan, such as repealing the estate tax and lowering the corporate tax rate and the rate for income from pass-through businesses to 15 percent.

The Ryan plan also repeals the estate tax but would lower the corporate tax rate to 20 percent and the top rate for pass-through business income to 25 percent.