San Antonio Express-News: GOP unveils its tax overhaul
Dems call it corporate giveaway
By Kevin Diaz WASHINGTON BUREAU
Tom Brenner / New York Times President Donald Trump holds examples of "postcard" tax returns alongside Rep. Kevin Brady, R-The Woodlands.
Win McNamee / Getty Images
Sennate Minority Leader Chuck Schumer listens as House Minority Leader Nancy Pelosi reacts to the tax proposal.
WASHINGTON — Republican Kevin Brady of The Woodlands, the point man for a sweeping GOP overhaul of the U.S. tax code, unveiled long-awaited tax cut legislation Thursday aimed at spurring jobs, the economy and his party's prospects in the 2018 elections.
The "Tax Cuts and Jobs Act" — cast as a once-in-a-generation rewrite of the nation's tax laws — was met with furious criticism from Democrats, who denounced it as a giveaway to corporations and the wealthy at a time of increasing economic disparity and a growing national debt.
The coming congressional battle could crystallize partisan differences on the economy leading up to the midterm elections, even if much of the negotiation will be limited to Republicans who make up the majorities in both the House and the Senate.
The rollout — delayed a day to accommodate last-minute differences among Republican lawmakers — mirrored a blueprint that Brady, as chairman of the tax-writing Ways and Means Committee, has been preparing for more than a year.
It calls for lower individual and corporate tax rates and the elimination of most itemized deductions, including, most controversially, deductions for state and local income and sales taxes.
Deductions for local property taxes, a major tax saving for many Texans, would be capped at $10,000, a partial concession to Republican lawmakers from high-tax states who balked at an earlier proposal to eliminate the property tax deduction altogether.
In another concession, Brady's plan would preserve the home mortgage interest deduction for existing loans, a popular write-off backed strenuously by Realtors and home builders. But the deduction would be capped for newly purchased homes up to $500,000.
Brady, an 11-term congressman from The Woodlands, also backed away from earlier proposals to dial back or change how Americans save for retirement in 401(k)s and Individual Retirement Accounts.
While Republicans sought to keep their focus on the modest savings to low- and middle-class Americans, Democrats aimed much of their fire at the expected outsized savings to high-income Americans and big business, which would see corporate tax rates drop from 35 percent to 20 percent.
Significantly, in an effort to live up to President Donald Trump's promise of stemming the flow of U.S. businesses and jobs overseas, the GOP plan would make it easier to repatriate foreign earnings and eliminate tax incentives for offshore investments.
U.S. Rep. LloydDoggett of Austin, the ranking Democrat on the Ways and Means Committee, invoked Trump to argue that the GOP tax plan would do little to help the economy grow or help the middle class.
"Ultimately, what the American people really get from this tax plan is a huge bill for the debt incurred to pay for tax breaks that line the pockets of Donald Trump personally along with his billionaire buddies," Doggett said. "Like a Trump University degree, it is phony. The smiles and middle-class hype cover up a giant giveaway to special interests. Since most of the tax benefits go to giant corporations, this bill is a testament to the power of limousine lobbyists."
Democrats also were critical of provisions that would repeal the estate tax and the alternative minimum tax, changes that would help taxpayers on the upper-end of the income scale.
Republican tax writers, in an effort to blunt Democratic criticism, decided in the end to keep the current 39.6 percent tax rate for high-income Americans. But for most taxpayers, the current seven tax brackets would be compressed to three: 12 percent, 25 percent and 35 percent.
In exchange for a host of lost write-offs and deductions for those who itemize their tax returns, the plan would nearly double the standard deduction to $12,000 for individuals and $24,000 for married couples. Because of the simplified tax tables, Brady said, most Americans could file their returns on a document the size of a postcard.
Republicans said that for a typical family of four with a household income of $59,000, their plan would lessen the tax burden by nearly $1,200 a year. For a "main street" business earning $62,000, the savings would be more than $3,000.
"With this bill, there's real relief for American families," Brady said.
Challenged in the public rollout to spell out the differences between his plan and the tax cuts of former President George W. Bush, which failed to live up to growth projections, Brady cited his plan's soup-to-nuts redesign of the nation's entire tax structure.
"We are not just putting higher octane fuel in an old clunker of a tax car," said Brady, accompanied by House Speaker Paul Ryan and other Republican leaders. "We propose to drive a new tax car that can compete against any country in the world."
Trump issued a statement applauding the bill, but stopped short of supporting it in detail: "We are just getting started, and there is much work left to do," he said. "The special interests will distort the facts, the lobbyists will try to save their special deals, and some in the media will unfairly report on our efforts."
Republicans are hoping to enact a tax cut plan by the end of the year. In fact, Trump later said at the White House that he expects it to be a "big, beautiful Christmas present" for taxpayers. But that's an ambitious timetable, given the complexity of a thousand-page-plus bill whose details have been largely under wraps until now.
Some business and conservative groups remained dissatisfied with the 11th-hour changes, while others cast as concessions to special interest groups protecting valued tax loopholes.
"Many of the concessions made in the proposal are the direct result of self-serving special interests groups like the National Association of Realtors and a small group of lawmakers placing parochial interests above the nation's interests," said Michael Needham, chief executive officer of the conservative group Heritage Action
The potential for Republican defections could prove problematic for party unity, which Brady will need in the House and the Senate, where the 52-member GOP majority plans to use special budget procedures to get around a Democratic filibuster.
But those procedures also require that the tax plan not add significantly to federal deficits over a 10-year budget window, necessitating a number of trade-offs such as curbing the mortgage interest and property tax deductions and eliminating the state and local income tax deduction.
Those tradeoffs became a major sticking point in recent days as details leaked out and alarmed industry groups in the housing market.
Among those speaking out was Granger MacDonald, chairman of the National Association of Home Builders and a home builder and developer from Kerrville.
"The House Republican tax reform plan abandons middle-class taxpayers in favor of high-income Americans and wealthy corporations," he said in a statement. "The bill eviscerates existing housing tax benefits by drastically reducing the number of home owners who can take advantage of mortgage interest and property tax incentives."
But other business groups in Texas weighed in to support the GOP plan. In a letter Thursday to the state's congressional delegation, nearly 40 business associations and business owners called on immediate action on tax reform.
"Passing tax reform is imperative given the current state of the tax code, the heavy burden of the corporate tax rate, and the impact both have on the economy and job creation," they wrote.