Trump predicts passage of tax plan by Christmas

 01 Nov 2017 - 0:43

Trump predicts passage of tax plan by Christmas
US President Donald Trump speaks at a meeting with business leaders on tax reform at the White House in Washington, DC, on October 31, 2017. On left, is Treasury Secretary Steve Mnuchin. AFP / Nicholas Kamm

By Ken Thomas & Catherine Lucey / Associated Press

WASHINGTON:  One day before the big reveal, President Donald Trump intensified his lobbying Tuesday for a tax overhaul plan whose shape was still under negotiation by congressional Republicans. The president predicted a grand signing ceremony before Christmas at "the biggest tax event in the history of our country."

"The process is complicated but the end result will not be that complicated. It's going to be: People are going to pay less tax by a lot, companies are going to pay less tax by a lot — that's a big difference — and companies are going to start rebuilding and they're going to stay here," Trump said in the Roosevelt Room, where he was joined by the heads of more than a dozen business and trade allies.

Trump said he's directing Treasury Secretary Steve Mnuchin, White House economic adviser Gary Cohn and other administration officials to stay behind when he heads for Asia on Friday so they can help sell the tax proposal. The White House said Ivanka Trump, the president's daughter and adviser, had canceled plans to accompany the president to China and South Korea to help push the package.

Trump and congressional Republicans are seeking the first major tax overhaul in three decades, eager for a significant legislative achievement after being stymied in their attempts to repeal the Obama-era health care law. Enacting a tax package is seen as critical to helping Republicans maintain their majorities in the 2018 elections.

The president said he was hopeful the House will approve the tax bill by Thanksgiving and that he can sign it into law by Christmas. But his overly optimistic timetable didn't address the concerns of lawmakers from states such as New York and New Jersey who have opposed a proposal to eliminate the federal deduction for state and local taxes, arguing it would hurt their constituents and subject them to being taxed twice.

One day before the plan was to be unveiled, legislators still were engaged in high-stakes negotiations over what deductions will stay and what will go.

The head of the House tax-writing committee, Rep. Kevin Brady of Texas, hinted at the ongoing fluidity, telling reporters, "There's going to be a lot of speculation on different issues and different areas. Stay tuned; you'll know the details very soon."

Even after the proposed legislation is put forward, Brady said, "We will continue in listening mode."

Brady has said that taxpayers will be able to continue to deduct local property taxes on their federal returns but the deduction for state income taxes would be repealed. The change means there would be three itemized deductions retained: for home mortgage interest, charitable donations and local property taxes.

The National Association of Home Builders, meanwhile, has withdrawn its support for the plan because it does not believe it contains enough tax benefits for home owners.

Tom Donohue, president and CEO of the U.S. Chamber of Commerce, told Trump that the business groups would continue to "work on it. We're going to have some differences amongst the business community on what should be the takeaways and the adds."

"I think your planning is really quite good: You're off to Asia and everybody else gets it worked out," Donohue said to laughter.

GOP tax writers are considering phasing in the planned cut in the corporate tax rate, from 35 percent currently to 20 percent by 2022. The White House rebuffed that suggestion on Monday, and Trump reiterated his opposition on Tuesday. And a battle continues over contributions to 401(k) retirements accounts. The financial industry and some Republican lawmakers insist that the GOP plan not change the tax benefits of the popular savings vehicles, as has been floated by GOP leaders.

The current Republican plan calls for nearly doubling the standard deduction used by most average Americans to $12,000 for individuals and $24,000 for families, and increasing the per-child tax credit. In addition to slashing the corporate tax rate, it also seeks to repeal inheritance taxes on multimillion-dollar estates, a big break for the wealthy.

The number of tax brackets would shrink from seven to three or four, with respective tax rates of 12 percent, 25 percent, 35 percent and one to be determined.

Democrats, excluded from the closed-door work on the plan, continued to attack it. The Republicans "made a big deal about how they were going to double the standard deduction — that's $12 grand for a middle-class family," Sen. Ron Wyden of Oregon, the top Democrat on the Senate Finance Committee, said in an interview. "But if you have four people in the family, or say five people in the family, and you get your 12 grand but you lose the personal and dependent-care exemptions — and then on top of it, you lose your state and local (tax deduction), that middle-class family is going to go in the hole."

The White House said Ivanka Trump, the president's daughter and adviser, would hold tax events around the country during her father's trip to Asia.

The first daughter is going to Japan for a speech Friday, but she has canceled plans to continue on to China and South Korea and will return to the U.S. over the weekend.