Rushing to give his big money corporate donors and rich pals the huge tax cut they have sought for years, President Trump has ordered his aides to prepare a plan to cut the corporate tax rate to 15 percent from its current 35 percent without worrying about how much it will increase the national debt.
Trump, who has been teasing a big tax reform announcement, told his aides to “get it done” by Wednesday, according to a report today in the Wall Street Journal, which a White House spokesman would not confirm.
Such a plan would fly in the face of statements Trump made during the campaign and since, as well as repeated promises by Treasury Secretary Steven Mnuchin and others close to the administration, that any new tax cuts would be revenue-neutral, meaning there will be no overall increase in the deficit as a result.
During the election campaign, Trump promised that he would reduce the national debt to zero in eight years. It is obvious that that was just another lie, as his tax plan would send our national debt through the roof.
That is not just important rhetoric. The Republican plan is to pass what it claims will be the biggest tax reform package since the Reagan administration through a method known as “reconciliation,” which means there can’t be any overall increase in the debt as a result.
Using “reconciliation,” the Republicans can pass the tax reforms with the slim majority of votes they hold in the House and Senate. If Trump is really abandoning that idea, passage would require some cooperation from Democrats. That could be problematic, as Trump saw with his failed push to replace Obamacare with Trumpcare.
The Congressional Joint Committee on Taxation in the past has estimated that for each percentage point that is cut off the corporate tax rate, federal revenue will fall by $100 billion over the next ten years. If Trump pushes for a 20 point cut, the government would lose $2 trillion in revenue. Even with the devastating budget reductions that Trump has proposed for the EPA, Transportation, The National Institute of Health, Meals On Wheels and many other departments and programs it would be virtually impossible for the revenue and cost to match up.
“That makes it difficult if not impossible for Republicans to pass a deficit-financed tax cut that doesn’t expire without getting Democratic votes in the Senate,” reported the Wall Street Journal.”
“Democrats are against large tax cuts for corporations,” added the WSJ, “especially at a time when Mr. Trump is proposing cuts to government spending programs they prioritize, like housing, arts, and the environment.”
Last week, Mnuchin and Gary Cohn, director of the National Economic Council, said Trump’s plan would not only address a lower corporate tax but would also tackle the taxes paid by individuals.
“We are ging to come out with a unified, united tax proposal from the White House,” Cohn said on April 20, “that will include individual as well as corporate.”
Trump is rushing ahead with his tax reform plan despite its incredible complexity and the strong Democratic opposition. The individual tax reform, most Democrats believe, will be an effort to cut taxes for the super-rich without delivering on Trump’s promise to also provide relief to middle and lower income taxpayers.
He is doing it when there is still no extension to the budget, with a shutdown of the federal government looming at soon as next week. Trump has said he wants millions to build his wall on the Mexican border included in the budget extension, which Democrats have said will not be included at this time, if ever.
So once again Trump is trying to match his exaggerated rhetoric with a political agenda to prove how powerful he is, while actually setting himself nad his administration up for yet another high profile failure.
Even for someone as self-delusional as Trump, this is a leap of faith that looks as promising as jumping out of an airplane without a parachute.