Jim Geraghty of National Review and Greg Corombos of Radio America are glad to see France, Germany, and the UK conclude that Iran attacked Saudi Arabia earlier this month and that there is no other plausible explanation. They also groan over the political circus about to begin as House Democrats appear to be moving en masse towards impeachment and even President Trump seems to like the idea of getting impeached because it would help him win re-election. And they discuss the dystopian world Bernie Sanders wants us all to live in as he proposes a ludicrous wealth tax to pay for the massive expansion of government that he envisions.
Jim Geraghty of National Review and Greg Corombos of Radio America fume as President Trump says ISIS is defeated in Syria on Wednesday and Thursday he claims that Russia, Iran, and Syria can handle the fight. They’re also disgusted as Trump’s insistence on $5 billion for a border wall seems to be shifting and congressional Republicans appear to have no interest in this fight despite promising one just before the midterm elections. And they hold the door open for Sen. Jeff Flake to leave and never come back as the retiring Arizona lawmaker proposes a new carbon tax just days before leaving office.
Jim Geraghty of National Review and Greg Corombos of Radio America discuss new polling showing public perception dropping for businesses that are publicly breaking ties with the NRA, due entirely to a massive plunge in favorability among Republicans. They also breathe a sigh of relief as Republicans in Arizona’s eighth congressional district reject the frontrunner in the primary after the married minister was caught exchanging inappropriate texts with a female staffer. And they wish the best of luck to 20 state attorneys general who argue that all of Obamacare should be declared unconstitutional now that the tax provision that saved it at the Supreme Court in 2012 has been scrapped in the new tax law.
The chairman of the House of Representatives’ powerful tax writing committee says the tax reform blueprint laid out by President Trump last week is “exciting” and predicts enactment will lead to stronger businesses and more financially secure families.
Trump’s economic team laid out the administration’s principles on Wednesday, including a call for the corporate tax rate to drop from almost 40 percent down to 15 percent, a doubling of the standard individual deduction, and creating just three tax brackets instead of seven.
House Ways and Means Committee Chairman Kevin Brady, R-Texas, loves that Trump is going bold on tax reform.
“This is very exciting,” said Brady. “Americans saw something they haven’t seen in 30 years, which is a president willing to lead on tax reform and committed to working with the House and Senate. We want to get this done this year.”
“We only get one chance in a generation to do this, and like Reagan, we have to go bold to do it,” said Brady.
But Brady is not in a tremendous rush. He says the process needs to play out in the weeks ahead.
“Beginning [this] week, we’re going to roll up our sleeves, sitting down with President Trump’s team and the Senate as well to put together a single tax reform plan that’s going to take place over the coming weeks,” said Brady.
While partisans and the media are focused heavily on the pace of legislative action in the early stages of the Trump administration, Brady says getting it right in a timely fashion is most important.
“I think a lot of press in Washington are focused on which month this happens. My focus is on the year and that means this year, 2017. After 30 years of this broken, complicated tax code, it seems like exactly the right time to deliver,” said Brady.
Brady says the Trump blueprint would be a boon for businesses and families. He says dropping the corporate tax rate to 15 percent would make a monumental difference in America’s business climate. He says the small business owners will be smiling too.
“For small business owners, we propose to cut your taxes by more than 40 percent. That’s so you can send less to Washington. you can invest more in your business, your workers, your success. We provide full, unlimited write-offs of all your investment and building’s equipment, software and technology,” said Brady.
He says other provisions should ease the burdens of small business owners as well.
“We eliminate the death tax, so family-owned businesses no longer have to worry about Uncle Sam swooping in and taking nearly half of what you’ve earned over a lifetime. Then we eliminate some of the double taxation. For small businesses, this is game-changing, since this will grow the economy by more than nine percent” said Brady.
Where the tax bill could run into friction is over a proposed border adjustability tax, which would add a tax on imported goods. While critics say American consumers would end up paying for it in higher prices, Brady says it needs to happen, in part because everyone else except North Korea and Cuba does it.
“They take a major tax off their products heading into America. They slap a tax on their made in America products when it goes in their country,” said Brady.
“A foreign product has a major tax advantage over a made in America product, both here and abroad. So we’re saying for the first time that every product pays an equal tax. So no longer is Chinese steel getting a break over American steel, Mexican beef over American beef, Canadian autos over American autos,” said Brady.
He also says the more level playing field will likely entice many companies that left the U.S. and others that never were here to set up shop in America, adding to even more job creation.
As for families, Brady says the typical family of four will like the bigger paychecks coming home.
“You’re going to keep more of the money that you earn. The tax code is going to be dramatically simpler. If you save for retirement, education or health care, we cut your taxes in half again because we want to reward those types of savings,” said Brady.
“The bottom line is the House Republican blueprint, the idea we’re bringing to the president, is a code so fair and simple, nine out of ten Americans will be able to file using a simple postcard system,” said Brady.
As Americans sprinted to the mailbox or their computer to file their income taxes Tuesday, the leader of the nation’s largest grassroots taxpayers organization says major tax reform is necessary, is still doable and there’s no better time than now.
National Taxpayers Union President Pete Sepp says Republicans may well have the best political opportunity to tackle tax reform in this lifetime.
“We have an opportunity here that may not come in another several decades to do something more comprehensive with the tax system. And we can’t afford to pass it up, not because of the politics but because of many other situations, a perfect storm if you will, that has both opportunity and peril,” said Sepp.
He says American must realize that if major reforms don’t happen, Americans will be much more burdened by the system in the years to come.
“Standing still on tax reform means falling behind. It does not mean more of the status quo. It means something worse, and lawmakers need to remember that,” said Sepp.
How will it get worse?
“Otherwise, we’re going to get into a situation where we have a small cut in tax rates, the overall tax burden shifts only slightly, and the horrible burdens of having to comply with the system remain and actually worsen,” said Sepp.
In addition to wanting to see individual and business tax rates drop, Sepp says aggressively simplifying the system needs to be a huge priority, after Americans suffered through seven billion hours of compliance headaches this year, plus an addition billion hours on paperwork to comply with the tax code.
“For most families, that would mean increasing the standard deduction and personal exemption so that most households don’t really find it attractive or worthwhile to itemize all of those deductions. That cuts down the time and effort spent on the filing process. For businesses, it means simplifying the reporting of expenses,” said Sepp.
“Right now, all of the depreciation schedules and the clawbacks and the exceptions to the rule require tremendous amounts of calculation and record-keeping,” said Sepp.
Many experts believe the approach and scope of the tax reform effort was kneecapped by the failure of Congress to address health care reform in March. Sepp says there’s an argument to be made that repealing and replacing Obamacare would have made tax reform easier, and that the effort now is complicated by weak political momentum and the many Obamacare taxes that are still standing.
Nonetheless, Sepp believes a bill can still get done, with congressional committees crafting bills in the fall and sending a final version to President Trump early next year.
While Republicans do have the votes to pass reform without help from the Democrats, the legislation would be more effective if the Senate could find 60 votes to pass the eventual plan. With 60 votes or more, the tax reforms are made permanent unless Congress acts again in the future. Without 60 votes, the provisions would sunset after 10 years and return to the rates and policies in existence now.
Sepp thinks it may be possible to win over some Democrats.
“If Republicans try hard enough to involve Democrats in the process, especially on the Senate side, they might very well be surprised by the cooperation they’ll get. Ron Wyden, for example, the ranking minority on the Senate Finance Committee, has long supported revisions and simplifications to the tax system,” said Sepp.
“It won’t be easy. There’ll be a lot of arguments along the way, but engaging both parties in this effort will produce a stronger bill and a longer-lasting one,” said Sepp.
But how badly do lawmakers want to simplify the system? Politicians created the current maze and various interests benefit from it, so is there really enough will power to get this done? Sepp says it’s up to the people.
“What we need to do it harness the power of the grassroots to say to politicians, ‘Look, all these favors you have attempted to extend to us in the name of providing us constituents with relief is not worth the distortions to the economy, the long run costs to us as families and business owners. It’s got to stop,” said Sepp.
Given the current political climate, Sepp believes ideas like a flat tax or a national consumption, or Fair Tax will struggle to find their way into a final bill, but he reiterates this is the best chance to get this right in a long time.
“It’s going to be difficult to convince Congress to go whole hog on this effort, but that’s why groups like National Taxpayers Union exist, to make sure that we push the art of the possible to its maximum, so that we can get the best, strongest bill that will help the economy, that will makes taxes simpler and will stand the test of time,” said Sepp.
He says the simple rule of thumb ought to be for reform to benefit the greatest number of people possible.
“This isn’t just about cutting rates for large businesses that have operations overseas. It’s about reducing rates and complexity for small businesses and allowing the filing process to be more transparent and less burdensome for families as well,” said Sepp.
As the deadline to file federal income tax returns approaches, multiple protests are planned, and while some critics of President Trump will take to the streets to demand he release his tax returns, another demonstration will urge him to drastically reform the tax system.
On Saturday, Americans for Fair Taxation will rally outside Trump Tower in New York City Saturday between 11 a.m.-1 p.m. ET, with a very simple message.
“The message is it’s time to actually do real tax reform,” said Americans for Fair Taxation President Steve Hayes.
The Fair Tax would scrap federal income taxes for individuals and businesses, along with payroll taxes and state sales taxes and replace it with a 23 percent national retail sales tax.
Hayes says there are multiple reasons for pursuing a simpler system like the Fair tax, starting with the need to curb deficits. He says paying taxes with each purchase makes tax evasion virtually impossible, which is not the case with the more traditional reforms currently being discussed in Congress.
“You’re going to continue to have legal evasion which, according to the study just released by Professor (Richard) Cebula using IRS and government numbers, (there will be) nine trillion dollars dollars of evasion over the next ten years,” said Hayes.
He says the alternative to the Fair Tax is a lot more audits.
“There’s less than 0.7 percent audits of which three-quarters are no longer face to face audits but through the mail. They’re going to have to do 10-15 times more actual audits than they are now to even start to put a dent in evasion,” said Hayes.
“The 80 percent who obey the law are going to get harassed, just like the 20 percent that are not following the law,” said Hayes.
Hayes says politicians and special interests benefit from the perpetuation of the current system, but the American people do not. He says a Fair tax would also help people see how big government is.
“Everything is funded through a retail sales tax. People, when they make purchases, will see the real cost of government at the time of a retail good or a retail service,” said Hayes.
He says that makes politicians nervous.
“If there’s anything that’s going to help reduce the urge of these guys to reduce the urge to spend and look for ways to cut, it’s going to be everybody watching them closely, because every time we make a purchase we see the cost of government,” said Hayes.
One of the most common arguments against the Fair Tax is that a sales tax is a heavier burden on lower income Americans. Hayes says that’s not true, noting that Americans living under the poverty line would get monthly assistance on top of any income, in essence lowering their effective tax rate from what it is now.
He also notes that the payroll tax system is far more regressive, since it starts taxing the very first dollar earned by an employee.
While getting the Fair Tax to be part of tax reform this year seems like a steep climb, Hayes is encouraged that President Trump seems eager to hear all ideas. And while he says the current framework of reform is an improvement, the Fair tax would make things far better.
“Anything is better than we have now. No question about it. The Brady plan is better than we have now, but it’s all temporary because the lobbyists will start changing it once it’s there. We need to make a fundamental change. We need to give our freedom back and put in a system that works for everybody,” said Hayes.
The Virginia congressman who defeated his own party’s House Majority leader three years ago is hailing President Trump’s speech as a “total conservative tour de force” but says Republicans must resist the temptation to embrace Obamacare-lite and truly embrace repeal and reform.
Trump’s speech Tuesday night to a Joint Session of Congress highlighted a number of conservative priorities. It received acclaim for both style and substance. Rep. Dave Brat, R-Va., was thoroughly impressed.
“He hit it out of the park. It was just a total conservative tour de force across all the issues and it was all upbeat. It just gave everybody hope,” said Brat. “When MSNBC can’t say anything negative, you know you had a good speech.”
Brat hailed Trump for pushing tax cuts as part of overall tax reform and for lifting the regulatory burden from families and businesses. While politicians and pundits alike suspect tax reform cannot happen this year, Brat says Trump has a way of motivating people that the so-called experts may not understand.
“This city has a way of delaying and letting the special interests take over. Trump is the one guy who can light a fire and make sure that does not happen,” said Brat.
One of Trump’s most forceful demands was for Congress to repeal and replace the Affordable Care Act, also known as Obamacare. But how that can be done is becoming increasingly contentious inside the GOP.
Last week, a leaked memo of a Republican replacement plan set off fierce debate as the more conservative members of the House and Senate balked at replacing health care subsidies with refundable tax credits.
Brat also revealed that the debate over tax credits is playing out only in the wake of the leaked memo because GOP lawmakers haven’t assembled to work through a replacement bill.
“We’ve never even had a show of hands for , ‘Hey, which way do you want to go on this? That’s part of the problem with this town. Our conference needs to be more transparent and represent the will of the people,” said Brat.
“We all ran to represent the will of the people. We all ran for six years on repeal of Obamacare. So when you say repeal of Obamacare, I think the average person means repeal of Obamacare, right? If we end up putting Obamacare-lite in its place, our base is going to be furious. The average small businessperson is going to be furious,” said Brat.
Brat reminds citizens and lawmakers how we got into the current predicament with respect to Obamacare.
“The insurance guys walked into the White House eight years ago looking at their shoes. They were going to get 18 million new customers, but they knew they were setting up a non-free market death spiral system,” said Brat.
He says Republicans can’t leave the American people effectively headed down the very same road.
“Having taught economics for 20 years, you’ve got to get the system right. That’s what some of us are very worried about, that’s we’re going to do an Obamacare-lite. Then our team is going to own that product. That will be a disaster,” said Brat.
“We’ll just do the same thing and call it (something) different, but you keep the insurance regulations. You keep the implicit mandates. The tax credits will turn into a new entitlement. And then we’re also getting rid of the health care deductions in the piece that was leaked on Politico,” said Brat.
Pointing out that entitlement spending is set to engulf the entire federal budget within a decade, Brat says responsible lawmakers cannot create another entitlement through the tax credits.
“We do not want to provide another federally-run entitlement program. The others are all insolvent, right, Medicare, Social Security. Everything the feds touch is insolvent,” said Brat, who points out Trump will need to fend off the growth of mandatory spending, either through entitlement reform or pushing tax reform that spawns major economic growth and tax revenues.
Brat says the most obvious priority in replacing Obamacare needs to be lowering the costs.
“Everybody’s paying attention to who’s covered and whether everybody’s covered, but we’re ignoring the cost of 300 million Americans,” said Brat. “If you can half the cost, then the money we’re spending goes twice as far just on simple math.”
In the meantime, Brat urges the public to see through the slanted media coverage on repeal and replace. The congressman points out bronze plan deductibles are now averaging $12,000 per year while premiums increase roughly 20-25 percent per year.
“Then the press calls and they say, ‘Hey, can you assure us that every single person is going to be just as well off or have gold-plated health care?’ I’m like, ‘You’re missing the thesis. Obamacare is in a death spiral, according to the heads of Humana and Aetna,'” said Brat.
“The entire system is collapsing under it’s own weight. About five million people lost their plans due to Obamacare. Where’s the reporting on there? The reporting is just in the realm of fake news at times and they’re acting like the Republicans are in charge of the disaster that just happened over the past eight years,” said Brat.
Despite his frustrations with the media and a lack of communication within GOP ranks, Brat is still optimistic repeal and replace will happen and that it will be done right.
“The car’s in the ditch. Now we’ve got to pull it out, get some free market principles going and I think we have plenty of time to get it right,” said Brat.
President Trump has floated the idea of a border tax or border “adjustability” with Mexico to raise the revenues needed to fund construction of a border wall along America’s southern border, but the leader of the nation’s largest grassroots taxpayers group says the president must be careful not to punish American consumers.
“This is a very confusing and intricate issue, probably the most complex aspect of the tax reform discussion right now,” said National Taxpayers Union President Peter Sepp.
Among his first actions as president, Trump authorized construction of the border wall and once again vowed that Mexico would pay for it. After the Mexican president dismissed the idea, Trump and White House Press Secretary Sean Spicer have both discussed the idea of a border tax on Mexican imports as high as 20 percent.
But Sepp says it is unclear whether they are referring to an actual border tax or a concept known as border adjustability.
“What we’re really doing here is reading tea leaves. This is a tea cup that goes very deep. We’re having a difficult time telling exactly what the administration wants to do here,” said Sepp.
The answer it critical because Sepp says the difference between a straight tax and border adjustability is significant. He says an actual border tax would not be good news for working Americans, since Mexico can simply pass along their higher costs to the people who buy its products.
“Taken in isolation, a border tax, where you have a trade deficit with a given country, you slap a tax on its goods coming into the country that’s aimed specifically at them, that could result in consumers having to pay more out of their own pockets here in the United States,” said Sepp.
Border adjustability is different.
“What (adjustability) tries to achieve is if you send something out of the United States for export and sell it abroad, it is not subject to U.S. tax. If you are bringing in goods, either finely finished goods or raw materials, to make something in the United States, you’re not allowed to deduct it anymore under border adjustability. It’s supposed to be a border-neutral way of handling economic activities,” said Sepp.
Sepp says that concept along with fundamental tax reform involving lower tax rates, full expensing of investments and allowing companies to be taxes only by the countries where they earn their money, could have some benefit.
“If you take an entire reformed system like that with border adjustability in it, you might be able to minimize some of the impacts on consumers,” said Sepp.
Trump critics allege that any such move to draw more money out of Mexico could trigger a trade war with one of our top trading partners. Sepp says that is unlikely unless Trump goes ever further and slaps new tariffs on Mexican goods.
“Those kinds of things always tend to invite some kind of retaliatory action. We need to be careful about how these kinds of policies are pursued. Sometimes a tariff might be justified if another country initiates a tariff against us. But for us to do that unilaterally from the start can complicate matters to a great degree,” said Sepp.
Trump’s first executive action on trade was the formal withdrawal of the U.S. from the Trans-Pacific Partnership, or TPP. Sepp says that decision is understandable.
“That treaty did have its flaws, a multi-lateral agreement involving something like a dozen nations, is going to be pretty complex by its very nature,” said Sepp.
But Sepp says existing and prospective trade partners would have a better idea of where Trump wants to lead on TPP if he listed reasons for the U.S. withdrawal.
“The problem is, by simply walking away from the Trans-Pacific Partnership and saying, ‘Well, we’ll try bilateral approaches,’ that creates a great deal of uncertainty about U.S. trade policy going forward,” said Sepp.
“To be more specific about the flaws in TPP would have been helpful in sending signals around the world that the U.S. is still committed to free trade, but these are the particular problems that we have with an agreement like TPP,” said Sepp.
While Sepp says border adjustability is the thorniest issue, he wants to see Congress get moving on substantive tax reform while the opportunity is available.
“I think the momentum is still there. What needs to happen going forward is the tax writing committees – House Ways & Means and Senate Finance – need to have hearings on these specific aspects of tax reform. Answer some of the questions are causing a lot of fear and speculation, and then start to build a legislative consensus around a particular bill,” said Sepp.
“Right now, we have a blueprint for tax reform. That is not legislation. We need to get to the legislative part as quickly as possible,” said Sepp.
Greg Corombos of Radio America and David French of National Review cheer the many thousands of Americans marching for life and against abortion Friday in Washington. They also shake their heads at President Trump’s suggestion that a 20 percent border tax on Mexican imports might be a good way to pay for a border wall. And they discuss all the humiliating concessions and retractions Atlantic magazine has to make following its story suggesting ultrasound is used to deceive women into believing their unborn babies are people with heartbeats who can feel pain.