The Washington Post reported earlier this week that the GOP's big "tax reform" plan would cut taxes for the rich in three different ways, but that was apparently just the beginning.
In addition to the previously reported cuts for corporations, pass-through income, and top marginal rates, their plan also calls for eliminating taxes on overseas profits, among other things.
The plan would end taxes on the profits that multi-national companies earn outside the country, and allow those companies to repatriate past profits at a discounted rate. In addition, for at least five years, the plan would allow companies to write-off the cost of investments immediately, rather than deducting those costs over time as they do now. [...]
What's more, the GOP plan would eliminate the estate tax — which applies only to those with assets of more than $5.49 million — as well as the Alternative Minimum Tax, which hits upper-income taxpayers.
So, to recap, their plan calls for:
-Cutting corporate income taxes
-Cutting top marginal rates
-Cutting taxes on pass-through income
-Eliminating the estate tax
-Eliminating the alternative minimum tax
-Eliminating taxes on overseas profits
By their own estimates, their plan could cost up to $5 trillion. Republicans say they intend to pay for at least half of their cuts by eliminating special deductions, but their plan doesn't actually specify which deductions they will eliminate.
There's no text of a bill that we can share here because an actual bill doesn't exist yet. This is more or less a Christmas wishlist that Republicans hope to find under the tree in December.
At least some Republican seems to understand how insane all of this is. Senator Bob Corker announced last night that he would not seek reelection in 2018 and, while he has never shied away from reporters in the past, he has been saying the quiet parts out loud on "tax reform."
"We've got to move ahead and try to deal with the revenue piece," said Corker, who recently met with Treasury Secretary Steve Mnuchin about White House plans for tax reform. "At the end of the day, our nation is going to end up with trillion dollar-a-year deficits in a just few years and we already have $20 trillion in debt."
Corker says they've "got to move ahead" with the "revenue piece" because the plan unveiled by Republicans today includes specific tax cuts they want to implement, but it does not specify how it will be paid for.
They can't specify how it will be paid for because their biggest pay-for is probably going to be cut from the final form of their bill.
Some House Republicans have already come out swinging against the plan to eliminate state and local deductions.
[Rep. Peter King] is one of 52 Republicans -- more than enough to scuttle any bill that lacks Democratic support -- who hail from districts that use the state tax deduction disproportionately. He thinks enough of those Republican colleagues will band together to keep its repeal out of any comprehensive tax legislation this fall, complicating GOP plans.
“I can’t vote for a bill that would eliminate the state and local tax deduction,” King said in an interview. In New Jersey, where lawmakers say losing the break would increase taxes on the average taxpayer by $3,500 per year, Representative Leonard Lance says he’ll also work to save the so-called SALT deduction. But would Lance vote against a tax-overhaul bill that repeals it?
“Let’s just say I would have the gravest of reservations,” said Lance, whose constituents reported paying $4.9 billion in state and local taxes in 2015, the highest amount of any Republican congressional district.
I still believe the most likely scenario is Republicans passing a strictly deficit-financed tax cut that isn't paid for at all. But they won't get the full $5 trillion they're asking for. It will be closer to $1.5 trillion.
On the other hand, it's possible they won't be able to scrape together 50 votes in the Senate for purely deficit-financed tax cuts. I don't know if trickle-down orthodoxy will be enough to carry the day.