The White House is changing its tactics for dealing with Congress when it comes to overhauling the tax code after the failed attempt to repeal Obamacare.
President Donald Trump’s administration will release the broad outlines of a tax plan Wednesday, and then spend the next four to six weeks building congressional support before turning the ideas into legislative text sometime in the summer, Marc Short, White House head of legislative affairs said to reporters Tuesday. While it may take until the end of the year for the bill to become a law, it isn’t likely to stretch into 2018, Short said.
The timeline contrasts with the White House’s approach to repealing the Affordable Care Act. Trump stayed on the sidelines for most of the debate while House GOP leaders crafted a bill and tried pitching it to fellow members. Only in the final stretch did Trump try to engage House lawmakers, calling on them to pass the bill and threatening to move to other issues if they didn’t. GOP leaders canceled a planned vote last month after concluding they didn’t have enough support. Prospects for repealing the law, known as Obamacare, remain in doubt.
White House economic adviser Gary Cohn and Treasury Secretary Steven Mnuchin have said they’ve already spent months talking with conservative groups, lobbyists and members of Congress to get their input on how to improve the tax code.
“You will see us engage outside audiences sooner,” Short said. “We have learned that in the House, the Republican party, to its credit, is enormously diverse in opinion. But that also sometimes creates challenges in bringing them together on a big legislative issue.”
Mnuchin and Cohn briefed Republican leaders in the House and Senate Tuesday evening on the Trump tax plan, which includes a corporate rate cut to 15 percent from 35 percent and a call for consideration of a child-care tax credit, a senior administration official said. Trump isn’t likely to endorse a border-adjusted tax, the official said. House Speaker Paul Ryan supports a BAT, which would replace the 35 percent corporate income tax rate with a 20 percent rate applied to companies’ domestic sales and imported goods, while exempting their exports.
Short declined to elaborate on the specifics of Trump’s plan, but said the goal isn’t to add to the deficit. He said the principles unveiled Wednesday haven’t been scored by the Congressional Budget Office to see how much they would cost. The administration expects that economic growth, along with the elimination of certain deductions and simplification of the tax code would pay for the lower corporate rate, according to Short.
Trump’s plan to slash the corporate tax rate could set up a showdown with Ryan and Kevin Brady, chairman of the tax-writing House Ways and Means Committee, who have said a tax plan must pay for itself. Ryan has questioned whether a 15 percent rate can realistically be offset.
The Urban-Brookings Tax Policy Center estimates that cutting the corporate rate to 20 percent would lower federal tax revenue by $1.8 trillion over a decade, while cutting it to 15 percent would decrease revenue by $2.4 trillion.
If a tax overhaul adds to the deficit after the initial 10-year window, it’s likely to run afoul of Senate budget rules for what can pass the Senate with a simple majority. Republicans have 52 members in the chamber; they can only spare two votes.