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Five things to know about Trump tax cuts: Phase two

Five things to know about Trump tax cuts: Phase two
© Greg Nash

The White House and some prominent GOP lawmakers want to roll out a second package of tax cuts this summer, building from the tax law President TrumpDonald John TrumpTrump renews attacks against Tester over VA nominee on eve of Montana rally Trump submits 2017 federal income tax returns Corker: Trump administration 'clamped down' on Saudi intel, canceled briefing MORE signed last year.

Republicans are interested in pushing for changes to the tax code they were unable to achieve in their 2017 measure, though a new tax bill is unlikely to become law this year. They say they want to make improvements to the tax code on an ongoing basis.

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Some Republicans think a vote on more tax cuts would be good for them politically, forcing Democrats to go on the record in an election year. But a vote on another tax bill also has the potential to backfire on Republicans if a few vulnerable Democrats back it.

Here are five things to know about “phase two” of tax cuts.


A focus will be extending the individual tax cuts

Republicans’ top priority for a second round of tax cuts is to make permanent the tax cuts for individuals that were included in the new tax law on a temporary basis.

These cuts — such as the lower rates and larger standard deduction and child tax credit — expire after 2025.

Lawmakers put an expiration date on the individual cuts in order to comply with rules that allowed the tax bill to pass the Senate with just a simple majority. Those rules prevent legislation from increasing the deficit after 10 years.

Republicans want to extend the tax relief they provided for individuals, and they also see a vote on cementing the individual cuts as a good way to put Democrats on the spot. Democrats said that one of the reasons they voted against the tax law was because the tax cuts for corporations were permanent but the tax cuts for the middle class were not.

“I invite Sen. [Bernie] Sanders and all of my Democratic colleagues to join me today and make tax rate cuts for hardworking middle-class families permanent,” Sen. Ted CruzRafael (Ted) Edward CruzProtesters confront Cruz at airport over Kavanaugh vote O'Rourke targets Cruz with several attack ads a day after debate Election Countdown: O'Rourke goes on the attack | Takeaways from fiery second Texas Senate debate | Heitkamp apologizes for ad misidentifying abuse victims | Trump Jr. to rally for Manchin challenger | Rick Scott leaves trail to deal with hurricane damage MORE (R-Texas) said in January when he introduced legislation to make the individual rate cuts permanent.

A bill is likely to include more than just permanent individual cuts

GOP lawmakers and the White House are also looking at including other tax changes on top of cementing the individual rates.

House Ways and Means Committee Chairman Kevin BradyKevin Patrick BradyOvernight Health Care — Presented by the Coalition for Affordable Prescription Drugs — Some ObamaCare premiums to decrease next year | Sanders hits back at Trump over 'Medicare for all' | Panel to investigate rising maternal mortality rates House committee to investigate rising maternal mortality rates How the Trump tax law passed: The final stretch MORE (R-Texas) has repeatedly mentioned in recent weeks that he’s looking at including incentives to boost business innovation and saving for retirement and education.

House Republicans released a tax-reform blueprint in 2016 that called for streamlining tax incentives for retirement savings and education. But these topics weren’t addressed in the tax law.

“We think we can do good things to help families save more and earlier in life,” Brady said last week at an event hosted by the Texas chapter of Americans for Prosperity, a group backed by wealthy GOP donors Charles and David Koch.

Another issue that the White House and GOP lawmakers are discussing is cutting capital gains taxes, either through lowering rates or indexing capital gains to inflation.

“I think we need to be bold on things like capital gains, indexing that for inflation,” Brady said at the event, adding that he wants to “unleash” investment by individuals.

Legislation to index capital gains has been offered by Cruz and Sen. James InhofeJames (Jim) Mountain InhofeGraham: 'Game changer' if Saudis behind journalist's disappearance GOP senators ask EPA to block states that have 'hijacked' rule to stop fossil fuel production Pentagon releases report on sexual assault risk MORE (R-Okla.), and conservatives are also making a push for the Trump administration to do this through executive action. But there are questions about whether the Treasury Department actually has the authority to index capital gains through regulation.

Trump is a top champion of tax cuts 2.0

Trump has talked about doing another round of tax cuts repeatedly this year. It’s become a topic he frequently brings up, particularly when he’s at events with Brady.

“We're going to be — with Kevin and the entire group, we're going to be submitting additional tax cuts sometime prior to November. It's going to be something very special,” the president said in late May at a gala hosted by the anti-abortion group Susan B. Anthony List.

Republicans say that the president’s leadership was key to getting the new tax law enacted, and he is likely to play a crucial role in pressing for any additional action on taxes as well.

Republicans want a vote in the House this fall

Brady and White House legislative affairs director Marc Short have both said recently that they want a proposal for additional tax cuts to be released over the summer.

Brady also said he sees an “early fall passage out of the House.” Likewise, House Majority Leader Kevin McCarthyKevin Owen McCarthyThe Hill's Morning Report — Presented by the Coalition for Affordable Prescription Drugs — GOP faces ‘green wave’ in final stretch to the midterms Conservatives fear Trump will cut immigration deal Democrats in swing districts advised to avoid talking about immigration MORE (R-Calif.) agreed that he thinks a tax bill will be approved in the House before the midterm elections.

When Fox Business Network host Maria Bartiromo asked McCarthy Wednesday if the House would be taking up a phase two of tax cuts after the midterm elections, McCarthy replied, “No, that’s before the election.”

The politics in the Senate are complicated

While a second tax bill could pass the House this year, there’s little chance it could pass the Senate — if a vote even occurs in the upper chamber.

The Senate doesn’t have any plans to pass any legislation this year using the procedures that allow bills to pass with only a simple majority. As a result, a tax package would need 60 votes, meaning at least nine Democrats would have to back it.

It would be a tall order for Republicans to get nine Senate Democrats to vote for another round of tax cuts. However, if the Senate holds a vote, several of the Democrats most vulnerable in the midterms could support such a measure as a way to show voters that they support Trump’s agenda.

That could be detrimental for Republicans who have made attacking Democrats for opposing the tax law central to their campaigns.

Besides the political risks of giving Democrats the chance to vote for tax cuts, Republicans also may see some "no" votes from their own conference.

Sen. Jeff FlakeJeffrey (Jeff) Lane FlakeOn The Money: Treasury official charged with leaking info on ex-Trump advisers | Trump to seek 5 percent budget cut from Cabinet members | Mnuchin to decide by Thursday on attending Saudi conference Mnuchin to decide by Thursday whether to attend Saudi conference GOP senator: Not 'appropriate' for Mnuchin to go to Saudi conference MORE (R-Ariz.) said in May that he won’t vote to make the individual cuts permanent, criticizing such a potential effort as a “show vote.” He and other GOP senators have also been wary of voting for tax cuts that aren’t paid for.