Washington • Sen. Orrin Hatch joined fellow Republicans on Wednesday in unveiling a tax reform package that would double the standard deduction and more than halve the number of tax brackets while also lowering the corporate tax rate.
The ambitious plan — which Hatch will oversee as chairman of the Senate Finance Committee — did not detail what deductions would be eliminated to make up for the lost money from the tax cuts, the sticking point in actually passing an overhaul of the tax system.
The proposal, now the top goal for the GOP-led Congress and President Donald Trump after the failure to repeal Obamacare, would cut the corporate tax rate to 20 percent from 35 percent, make it easier for multinational companies to bring profits back to the United States, lessen the number of tax brackets to three from the seven currently in law and expand the child tax credit.
The GOP wish list also would lower the top tax rate to 35 percent from 39.6 percent, eliminate the estate tax and get rid of the alternative minimum tax, which is aimed at ensuring wealthy Americans can’t get away with paying no taxes. Deductions for mortgage interest and charitable giving would remain in place.
“We’re tired of things going the way they’re going,” Hatch said in announcing the plan with House Speaker Paul Ryan, Senate Majority Leader Mitch McConnell and other GOP members. “We’re going to turn this mess around.”
Trump said Wednesday that the tax reform framework would help American companies compete with foreign competitors and give the middle class a leg up.
“This is a revolutionary change, and the biggest winners will be middle-class workers as jobs start pouring into our country, as companies start competing for American labor, and as wages continue to grow,” Trump said.
Trump told reporters he wouldn’t benefit from the tax plan and there would be “very little benefit” for wealthier individuals. But a leaked 2005 tax return showed that while Trump would have paid just $5.3 million in regular income tax, the alternative minimum tax forced him to pay $31 million. It is hard to gauge how the plan would personally impact the president, because he has refused to release any of his tax returns, which had been commonplace among the recent past presidents.
Republicans say the proposal will make it easier for most Americans to file their taxes — perhaps on a form the size of a postcard, they say — and Hatch touted the plan as a way to “lift the middle class” and let workers keep more of their paychecks. He added that if enacted, the tax reform would boost small businesses so they can hire more employees.
“I hope we can bring Democrats and Republicans together in the best interests of this country,” Hatch said.
That may prove difficult.
Democrats said Wednesday they support simplifying the tax code and helping the poor and middle class but that the GOP proposal is really a gift to wealthier Americans and businesses.
“Each of those proposals would result in a massive windfall for the wealthiest Americans and provide almost no relief to middle-class taxpayers who need it the most,” said Senate Minority Leader Chuck Schumer. “It seems that President Trump and Republicans have designed their tax plan to be cheered in country clubs and corporate board rooms.”
Conservatives lauded the general plan, and the House Freedom Caucus — which holds big sway in the GOP caucus — endorsed it.
Sens. Mike Lee of Utah and Marco Rubio of Florida said in a joint statement they back the expansion of the child tax credit as “the best way to provide meaningful tax relief for working American families.”
“Given the fundamental reforms of the framework, the child credit must be at least doubled in order to ensure working families get real tax relief,” the two senators said. “The child credit should also be applied to payroll tax liability in order to cut the taxes that working class families pay.”
Evelyn Everton, director of the Utah branch of the Koch family-backed Americans for Prosperity, said the GOP plan has the “potential to unrig the American economy.”
“Utahns want to keep more money in their paychecks,” she said, noting the group’s supporters would mobilize to help get it passed.
While the GOP blueprint outlines some changes to the tax code, Republicans may face a challenge to securing enough votes when the details are ultimately worked out. Budget experts say the broad outline — without closing other loopholes — could decrease federal tax revenue by more than $5 trillion in the next decade, according to The Washington Post.