It’s full-steam ahead on tax reform … with no details
State and local tax deductions could be on the chopping block.
The investment income tax of 3.8 percent for high earners likely will remain.
The last major tax code rewrite took years.
Despite facing September deadlines to increase the debt ceiling and pass a new federal budget, Republican congressional leaders have made it clear that tax reform will be their legislative priority when they return from their August recess.
Yet exactly what’s in their plan remains unclear. And based on a joint White House-GOP statement — which outlines a philosophical approach to changing the U.S. tax code but includes no specifics — even lawmakers are unsure what they will begin debating next month with the goal of passing a bill before the end of the year.
“One big challenge they face is that there’s no clear starting point,” said Kyle Pomerleau, director of federal projects for the Tax Foundation.
Nevertheless, Republicans are in their home districts this month, charged with ginning up popular support for tax reform. Various activist groups are waging campaigns, too, in an effort to sway public opinion.
Part of the uncertainty arises from the differences between President Donald Trump’s most recent wish list and last year’s Republican blueprint for tax reform. There also are differences among Republicans themselves, and the potential for Democratic pushback is high if only wealthy Americans benefit from any proposed changes.
Additionally, the balance between corporate tax cuts and individual relief could prove trickier because the idea of a levy on imports — which would offset reduced revenue from corporate tax relief — has now been nixed, according to the GOP statement released last month.
Nevertheless, Republicans are “fully committed to ensuring that ordinary Americans keep more of their hard-earned money,” according to the statement. It also says reform would “eliminate most of the tax breaks that mainly benefit high-income” taxpayers.
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