In rationalizing his break with the Republican Party by making a budget-debt ceiling-Hurricane Harvey aid deal with Democratic leadership, President Trump has said that he was trying to “clear the way” for tax reform.
Well, he forgot a roadblock.
Earlier this week the House Freedom Caucus released its own tax plan. Axios’ Jonathan Swan published some details. The plan:
- Slashes the corporate tax rate from 35% to 16%.
- Doubles the standard deduction for individuals.
- Abandons “revenue neutrality,” the dogma that tax reform mustn’t worsen currently projected deficits.
This contrasts the White House “Gang of Six” plan in that well, there is a plan.
But that’s about the only constructive thing you can say about the Freedom Caucus tax plan. It makes no credible attempt to raise revenue, and would extend tax cuts for twenty years rather than ten.
As for the corporate tax rate, Swan reports that the administration’s team thinks they will be lucky if it can get the rate down to 25% based on the revenue they can raise. (Which, given the real tax rate corporate America pays, wouldn’t be much of a change for US coffers — this would mostly be about closing loopholes.)
In short, this plan isn’t going anywhere. Of course, the Freedom Caucus knows that.
“Meadows wants to create dysfunction and they will do that under the guise of keeping Trump on his promises,” one source close to the White House told Business Insider. “Nothing is going to pass. Nothing is going to get done.”
In other words’ Meadows’ obstruction is effective — and it’s going into effect on the most important piece of legislation to his own party.
This is the same playbook the Meadows and his team used during Obamacare repeal negotiations. Instead of working with the rest of the GOP, Meadows dug in his heels on any change to the tax exclusion for employer-sponsored health insurance, making the GOP’s plan untenable. The WSJ pointed that out in a scathing Friday editorial about Meadows’ “record of accomplishment.” The paper dared Meadows to challenge House Speaker Paul Ryan for his position.
“If Mr. Meadows wants to stage a coup, he should do it publicly by putting his agenda and strategy front and center for everyone to see,” said the WSJ. “Take the dagger out from under the toga, Mark, and show your colleagues that lean and hungry look. Then let’s hold a vote.”
Meadows can’t win that vote and he knows it. He can and likely will, however, make the GOP lose tax reform.
Business Insider Emails & Alerts
Site highlights each day to your inbox.