Can Republicans create consensus within their caucus on tax reform?

[Ronnie]

It appears Republicans are moving on to their next agenda item, tax reform, so I think now is a good time to talk about where and how we think it might go.  Will the Freedom Caucus and moderates clash once more, scuttling Republican consensus, or will it be much easier to find areas of agreement on this issue than health care reform?  Might some Dems vote in favor of a bill they come up with? Share your thoughts.

[The_Doctor]

Yes. Tax reform unites all the wings of the Republican Party. They'll successfully cut taxes and Trump has no differences from the party. Tax reform will pass.

[Blue3]

There was also consensus to repeal and replace ObamaCare.

The devil is in the details.


(also, I saw a GOP Congressman on TV a couple hours ago saying there was even less agreement on tax reform.)

[Technocracy Timmy]

Tax reform just isn't as divisive within the Republican Party compared to healthcare reform. Reforming the tax code will be a far more successful endeavor for the GOP.

[Okay, maybe Mike Johnson is a competent parliamentarian.]

There was also consensus to repeal and replace ObamaCare.

The devil is in the details.

[moderatevoter]

The thing is, having consensus is not enough. They need true commitment and focus.

Part of the problem with AHCA was the sloppiness of the process. It just felt like Trump and Ryan didn't truly care; they just wanted to get through it as quickly as possible. With big legislation like this, you simply cannot do it. You need to take time to plan and draft it properly, doing so in a collaborative and open fashion until you find consensus. And you cannot ignore the importance of messaging.

I think tax reform, in theory, should be easier for Republicans... but they need to truly go all in.

[JA]

There was also consensus to repeal and replace ObamaCare.

The devil is in the details.

[Hindsight was 2020]

Sure it will be just cutting taxes for rich people

[OSR stands with Israel]

Yes. Tax reform unites all the wings of the Republican Party. They'll successfully cut taxes and Trump has no differences from the party. Tax reform will pass.

[○∙◄☻¥tπ[╪AV┼cVê└]

It appears Republicans are moving on to their next agenda item, tax reform, so I think now is a good time to talk about where and how we think it might go.  Will the Freedom Caucus and moderates clash once more, scuttling Republican consensus, or will it be much easier to find areas of agreement on this issue than health care reform?  Might some Dems vote in favor of a bill they come up with? Share your thoughts.

Well, 12 conservadems voted for the 2001 Bush tax cut. Feinstein is the only one still in the Senate.

[Ronnie]

It appears Republicans are moving on to their next agenda item, tax reform, so I think now is a good time to talk about where and how we think it might go.  Will the Freedom Caucus and moderates clash once more, scuttling Republican consensus, or will it be much easier to find areas of agreement on this issue than health care reform?  Might some Dems vote in favor of a bill they come up with? Share your thoughts.

Well, 12 conservadems voted for the 2001 Bush tax cut. Feinstein is the only one still in the Senate.

Feinstein would get primaried in an instant if there's even an inkling she's succumbing to Trump on a big agenda item, and she knows it.

[pbrower2a]

So how does one fund the revenue shortfalls? Consumption taxes that the non-rich pay as a privilege of living in a pure plutocracy? Selling off the public sector to monopolistic gougers?

A value-added (really a consumption tax)? Sure -- but only if it funds an even bigger welfare state. It is regressive, but a state imposing it had better ensure that people get cradle-to-grave economic security, highly-subsidized education at every level.

[True Federalist (진정한 연방 주의자)]

No. One reason the GOP tried tackling health care first is that to fund their tax cuts, they needed the wiggle room from the projected savings to the Federal purse due to less people having health care. As it turned out, because they were more concerned with setting up tax cuts than revising Romneycare and giving it yet another new name, they ended up doing nothing.

[President Johnson]

Probably, but only a minor reform. Not whole big thing.

[mvd10]

Tax cuts will pass. I'm not sure about tax reform. The main issue is making corporate income taxes border adjustable (taxing imports and exempting exports). It's not actually protectionist since it also will cause the dollar to rise. Most people in the senate apparently are opposed to it (just like the Koch brothers and many importers). But making corporate taxes border adjustable would bring in 1 trillion dollars over a decade, so without it it's going to be very hard to slash corporate income taxes. My guess is that they drop the border adjusting and accept a slightly higher corporate tax rate instead. Probably 25 percent instead of 15 or 20 percent like in most Republican plans (it' still much better than the current 35 percent).

The other things probably will easily pass (cutting income tax rates paid for by closing some loopholes, expanding the standard deduction, full expensing and territorial taxation).

It's a shame they won't consider a VAT. But a lot of hard-right conservatives are worried that Democrats would use a VAT to massively expand the welfare state. I'm not sure about that. The VAT is slightly regressive so I don't see the Dems pursuing massive VAT hikes. And if they get tax reform right and increase economic growth they probably don't have to worry about the Dems for a couple of years.

[ApatheticAustrian]

from tim alberta, talking with house way/means chair Kevin Brady about the challenges of tax reform




 https://mobile.twitter.com/TimAlberta/status/845463150354935808/photo/1 

[Santander]

Abolish the IRS!

[Brittain33]

Anything like the "tax reform" that's been discussed so far--not likely. Cuts in tax rates? Yeah, why not.

[Devout Centrist]

Tax reform isn't a slam dunk; tax cuts are. Remember the two last major tax bills were to simply increase or decrease taxes on a few select income brackets.

[mvd10]

No. One reason the GOP tried tackling health care first is that to fund their tax cuts, they needed the wiggle room from the projected savings to the Federal purse due to less people having health care. As it turned out, because they were more concerned with setting up tax cuts than revising Romneycare and giving it yet another new name, they ended up doing nothing.

Ernest is correct—without cuts to the ACA subsidies and Medicaid, there is no way to pass tax reform palatable to the Freedom Caucus, which will demand revenue neutrality. I suppose you could make massive cuts to entitlement programs, but that would almost certainly fail in the Senate and wouldn't have great odds of passing the House.

Would the Freedom Caucus really demand revenue neutrality? These are the people that wanted to default on the US debt. They probably believe that tax cuts pay for themselves. I actually think the more moderate Republicans would demand revenue neutrality as they probably are the most sceptical about supply-side economics.

[Blackacre]

Isnt the reason why they did healthcare first that something that would go through the Budget Reconciliation process can't increase the deficit? Without the tax cuts from Ryancare, tax reform is going to be harder

[Mehmentum]

Isnt the reason why they did healthcare first that something that would go through the Budget Reconciliation process can't increase the deficit? Without the tax cuts from Ryancare, tax reform is going to be harder

Yep, they have a few options.

1.) Use reconciliation to pass the tax cuts, offset by cuts to entitlements to make it budget neutral.  Since reconciliation takes 51 votes, they can only afford a single defection.

2.) Win over at least 8 Democrats while satisfying Cruz/Paul/whoever and the freedom caucus in the House.

Its not going to be as easy as Trump thinks.

[Skill and Chance]

Tax cuts will pass. I'm not sure about tax reform. The main issue is making corporate income taxes border adjustable (taxing imports and exempting exports). It's not actually protectionist since it also will cause the dollar to rise. Most people in the senate apparently are opposed to it (just like the Koch brothers and many importers). But making corporate taxes border adjustable would bring in 1 trillion dollars over a decade, so without it it's going to be very hard to slash corporate income taxes. My guess is that they drop the border adjusting and accept a slightly higher corporate tax rate instead. Probably 25 percent instead of 15 or 20 percent like in most Republican plans (it' still much better than the current 35 percent).

The other things probably will easily pass (cutting income tax rates paid for by closing some loopholes, expanding the standard deduction, full expensing and territorial taxation).

It's a shame they won't consider a VAT. But a lot of hard-right conservatives are worried that Democrats would use a VAT to massively expand the welfare state. I'm not sure about that. The VAT is slightly regressive so I don't see the Dems pursuing massive VAT hikes. And if they get tax reform right and increase economic growth they probably don't have to worry about the Dems for a couple of years.

The VAT is cumulatively about 15% in the highly populated and left-leaning provinces of Canada between provincial and federal sales taxes.  That's about as good of an international proxy as we can get for large blue states, so I would say Republican concerns here are justified from a fiscal policy perspective.  Federal income tax brackets in Canada on above median incomes are about 5% lower than in the US as a result (might be closer to 10% lower here under the same system as we aren't funding federal single payer).  Note that this system would disproportionately hit residents of the states with no state income tax, most of which are heavily Republican.  

The other, bigger problem with a VAT from a Republican perspective is that their coalition is much more dependent on seniors and much less dependent on wealthy 2 income couples in high cost-of-living areas than most conservative parties in the rest of the developed world.  The latter generally have the most to gain from a VAT system, while the former stand only to lose from a VAT unless they are wealthy to the point of taking >$50K/yr out of a traditional IRA or 401k in retirement (and those wealthy retirees with significant Roth assets also stand to lose substantially under a system that trades much higher sales taxes for lower income taxes).  A core part of the new Republican base would be in an uproar over this.  

By contrast, Democrats should love it as trading lower income taxes for a federal VAT could help them break through even more in high income, high cost-of-living suburbs.  They could also roll a backdoor basic income into it by adding a refundable tax credit equal to the VAT/sales taxes paid by an average family at 1-2X the federal poverty line and raising the VAT rate accordingly.  This could eventually amount to >$5K per family per year, basically a supercharged EITC.  So IMO it is perfectly rational for Republicans to stand against a VAT.  By contrast, Democrats should be a lot more interested in a VAT than they presently are.

On a related note, it is very surprising to me that the draft Republican tax proposals have language reducing or limiting the child and dependent tax credits.  This feels like political folly for conservatives given that families with 3+ children, a stay-at-home parent, and a single earner earning >2X median income are probably the single most Republican demographic in the country right now.      

[publicunofficial]

Tax cuts will pass. Tax reform won't.

[Brittain33]

It wouldn't surprise me if the politics on tax cuts have changed so much since the Bush era that Republicans can't pressure 8 Dems to go along with a big cut. It's possible that they hold out since handing the Republicans a failure over a deficit-busting tax cut tailored to the rich would demoralize Republicans and hold the Dem base.