An Obamacare replacement is being discussed and negotiated but at the same time President Trump has moved on to tax reform. It’s a massive undertaking that he is apparently doing without Speaker Paul Ryan on his team, according to Politico.
Ryan failed to deliver votes as promised on the Republican healthcare bill which might be weighing in the decision. It is likely, however, that Ryan and Trump are too far apart on tax reform.
Trump has his own team. While Trump’s reforms are noteworthy, Ryan’s Border Adjustment Tax (BAT) shifts a $1 trillion in annual tax burden on to exported goods and exporters. Domestic manufacturers are mobilizing because they would end up being liable for one-third of the Fed’s annual revenues. That would be in opposition to Trump’s major goal of helping the American worker.
The Border Adjustment Tax levies a 20% tax on all goods and services coming into the U.S. and it’s not popular with many on the right.
The establishment has never been on board with Trump’s agenda and he will have trouble with them and the Democrats whose only goal is to see Trump fail.
Larry Kudlow and Stephen Moore believe the Ryan Border Tax would seriously hurt sellers and import-reliant industries in general. It’s a poison pill.
“Bury the border adjustment tax,” Kudlow said. “Just bury it. Build a crypt and a nice grave and bury it.”
Sen. Lindsey Graham (R-S.C.) recently said Ryan’s proposal couldn’t get 10 votes in the upper chamber.
Politico reports that Trump’s plan includes Ivanka’s child care tax credit, which may cost an estimated $500 billion over a decade, according to the Tax Foundation. That’s to start.
Another problem is that there is no capital gains tax cut in Trump’s plan.
Heritage argues that “Cutting capital gains tax rates is the single best tax policy to improve economic growth.” Other conservatives agree.
CATO, the Libertarian Foundation, says “The House Republican tax plan would cut the federal corporate tax rate from 35 percent to 20 percent, but it would broaden the tax base in a misguided way. It would deny businesses a deduction for their imported inputs to production, but exempt exports from their taxable income.” CATO says this radical departure would increase taxes on many businesses and make the system more complex.
The Trump team is being led by liberal Steve Mnuchin and Trump hopes to woo Democrats. That sounds like a pipe dream since, in addition to hating Trump, Democrats do not like tax cuts. They are the party of tax and spend.