Trump’s “phenomenal” tax plan is going back to the drawing board
If President Trump was looking for a quick win, tax reform isn’t going to be it.
Before the election, Trump inked a “contract with the American voter” saying he’d work with Congress to present an ambitious tax reform plan within the first 100 days of his presidency. In early February he told a roomful of CEOs that his administration would be announcing something “phenomenal in terms of tax” within two to three weeks. Then his Treasury Secretary Steven Mnuchin in late February moved the deadline back, saying a plan would be ready by August. But none of those things are likely to happen.
The Associated Press reported Monday that the president has “scrapped the tax plan he campaigned on,” as Republicans struggle to come up with a unified plan for how to remake the U.S. tax system. (An analysis of Trump’s tax plan when he was a candidate showed it would lower tax rates on all income levels, but it would benefit the richest Americans the most, while cutting federal revenues and raising the federal debt.)
A near-term failure to get anything done on tax reform would be another significant blow for the president’s domestic agenda, after courts blocked his travel ban from majority-Muslim countries and the effort to repeal the Affordable Care Act—known as Obamacare—came to naught.
The Obamacare revamp foundered because the White House and GOP leadership couldn’t wrangle enough Republican votes for the bill, known as the American Health Care Act. The nonpartisan Congressional Budget Office’s analysis of the bill said that up to 24 million Americans might no longer have health care if the Republican legislation became the law of the land. The bill proved to be tremendously unpopular.
Likewise, the promised overhaul of the tax code seems to be crumbling along schisms within the Republican and conservative circles. A controversial idea that has emerged from the House Republican caucus called for a “border adjustment tax,” which would be designed to raise revenues by taxing imports while simultaneously incentivizing domestic manufacturing. But the border adjustment tax was opposed by strong interests within U.S. business community. (Retailers were outspoken critics.) Also the influential political advocacy operations run by the billionaire Koch brothers came out strongly against the idea.
So where does the effort to overhaul taxes go from here? When asked on Fox Business on Friday whether the administration would at least get a plan for tax reform done by the August timetable set by Mnuchin, Trump economic adviser and former Goldman Sachs chief Gary Cohn said “the most important thing is we get tax reform done and we get it done this year.”