How Trump Is Sabotaging the Republican Tax Cut Plan

During the Republican efforts to repeal Obamacare, Trump was all over the map.

  • First he said it would be easy, then he said, “who knew that health care was so complicated?”
  • He promised that Republicans would pass great health care, then chided Congress by saying they should simply let Obamacare collapse on its own.
  • He went back and forth on whether to repeal and replace, or simply repeal.
  • He publicly celebrated when the House passed their repeal effort, but privately called the legislation “mean.”

It soon became clear that, while the president supported Obamacare repeal, he didn’t know or care anything about how that should be done. That played no small part in the failure of Republicans to accomplish anything legislatively.

There are signs that the Trump administration is now repeating those mistakes on tax reform. According to Kevin Cerilli and Sahil Kapur, it was the White House that proposed the idea of eliminating the deduction for state and local taxes—which became part of the framework released by the so-called “Big Six.” After all, if you are going to propose huge tax cuts for corporations and the wealthy, you need to at least make an effort to pay for them. Estimates are that getting rid of that deduction produces $1.3 trillion in revenue over ten years.

That part of the tax plan is getting a lot of pushback though. Almost immediately after the framework was made public, Gary Cohn said it was negotiable. The problem is that the elimination of that deduction would actually raise taxes for middle and upper middle class Americans. When Trump learned that, he got angry.

Months after the White House proposed ending a tax break for people in high-tax states, President Donald Trump grew angry when he learned that the change would hurt some middle-income taxpayers, according to two people familiar with his thinking.

Trump’s concerns led him to say this week that “we’ll be adjusting” the tax-overhaul framework, the people said…

You might be asking yourself why the president is just learning what is in his own tax proposal. Here is how one of his biggest supporters explained it:

Representative Chris Collins, a New York Republican who’s close to Trump said he thought the president has been more focused on cutting taxes for corporations and pass-through businesses to stimulate the economy. “And he’s left it to others for the details of how we get there” and “how we pay for it,” Collins said.

Minus a little bit of spin from Collins, what he’s saying is that all Trump cared about were the big tax cuts he and his corporate buddies would be able to bank. He left all the details about how it would affect the rest of us to somebody else. But now all this talk about hurting middle class Americans is making him look bad. So he’s angry.

Take a look at the machinations the White House has gone through since the president learned what’s actually in his own tax bill:

Trump’s top economic adviser said Thursday morning that the president is not rethinking his position on repealing the state and local tax deduction.

The White House press office on Wednesday night declined to comment on internal deliberations, but released a general statement that said in part: “The president has made it unequivocally clear that a key priority for tax reform is to cut taxes for America’s hardworking middle class families.”

But Gary Cohn, the director of Trump’s National Economic Council, said Thursday that the president is not rethinking his position on the state and local tax deduction…

On whether or not this item is negotiable or if the president is re-thinking it, so far we’ve heard: yes, no, yes, no. Got that? The White House position on this is as clear as mud.

Meanwhile, there could be as many as two dozen House Republicans who are opposed to the elimination of this deduction—primarily those who represent districts in states like California and New York, whose constituencies will be hit the hardest. If that is the case, it could be enough to sink the whole plan. All of this begins to feel like perhaps we’re headed for a repeat of the failure to repeal Obamacare, with slightly different coalitions developing on either side.

Josh Marshall has a good rundown of the politics involved in all of this. While I agree with his conclusion that the best move for Democrats is to do everything they can to block this effort, the end result is not in their hands. Just as with Obamacare repeal, it will take a few defections from the Republicans ranks to stop it. Obviously the pressure on them to pass something (anything, really) is tremendous. The White House certainly isn’t helping.

Nancy LeTourneau

Nancy LeTourneau is a contributing writer for the Washington Monthly.