President Donald Trump said Wednesday he wants changes to the U.S. tax code that benefit the middle class, not the wealthy -- a call that contradicts some of his fellow Republicans’ positions and may complicate the path forward on tax legislation.
Even before Trump sat down for dinner Wednesday evening with Democratic congressional leaders Nancy Pelosi and Chuck Schumer -- both of whom have criticized his previous proposals as boons for the rich -- members of his own party were taking issue with the president’s remarks.
House Ways and Means Chairman Kevin Brady, who’ll play a primary role in shaping an eventual bill, repeated his goal of providing tax cuts to all income segments.
“My goal is to lower taxes on every American if it’s possible,” Brady, a Texas Republican, said Wednesday afternoon. Earlier, Senator Ted Cruz, also of Texas, called for replacing the current graduated rate system -- which applies higher rates to higher incomes -- with one “low flat rate for individuals and families.”
Brady and other Republican leaders said Wednesday that they plan to release a new framework for tax legislation in roughly two weeks. He said the document would provide “core elements” of the reform legislation that his committee and the Senate Finance Committee will write. While the elements of that plan have yet to surface, if it resembles previous proposals from Trump and House Republican leaders, it would provide benefits for the nation’s highest earners, based on various analysts’ estimates.
Trump, who has been courting Democratic votes for tax changes, told reporters Wednesday that he doesn’t expect the wealthiest Americans to benefit from the legislation. “I think the wealthy will be pretty much where they are,” he said. “They have to go higher, they’ll go higher, frankly. We’re looking at the middle class and we’re looking at jobs.”
No ‘Nonstarter’
At least one Republican in Congress, Representative Mark Meadows of North Carolina, indicated some willingness to consider Trump’s position, saying it wasn’t a “nonstarter” for him.
“I’m willing to look at everything,” said Meadows, who heads the conservative House Freedom Caucus.
Yet it’s unclear what shape the eventual tax legislation will take. Meadows and other House members emerged from a meeting with Brady Wednesday afternoon saying there’s still no agreement on where to set individual tax rates -- or the corporate tax rate, for that matter.
House members discussed a goal for the corporate tax rate of 20 percent, Meadows said -- a cut from the current 35 percent rate. Trump has said that his goal is a 15 percent corporate rate -- a goal he repeated Wednesday.
In general, though, members said that details remain up in the air.
“The dials are moving back and forth” on where to set rates and how to pay for tax cuts, said Representative Tom Reed, a New York Republican.
Bipartisanship Applauded
Reed was among a bipartisan group that met with Trump Wednesday. He noted Trump’s remarks about the wealthy, and applauded the president “for reaching across the aisle.” Because many Democrats have largely staked out a position against reducing the highest individual tax rates, Trump’s comments may lead to some compromises ultimately, he said.
Still, Reed said: “I am still committed to reducing tax rates across the board.”
Representative Henry Cuellar, a Texas Democrat who also met with Trump Wednesday, said the president told the group: “I’m not asking you to go out there and sell a tax cut for the rich.”
Previously, Trump and House GOP leaders have called for replacing the existing seven individual income-tax rates with just three, while reducing the top rate to 35 percent from 39.6 percent. Though that plan may be in flux, various economists have said it would indeed represent a tax cut for the highest earners in the U.S.
Other elements of the tax plan that Trump campaigned on would also benefit the wealthy, including his call for eliminating the estate tax. Under current law, only estates worth more than $5.49 million for individuals -- or $10.98 million for married couples -- are subject to the 40 percent tax.
Cruz’s Call
An analysis by the Washington-based Tax Policy Center found that under the one-page tax outline that the White House released in April, almost 40 percent of the tax cuts would have gone to the top 1 percent of earners -- giving those households an average annual tax cut of $270,000.
Cruz, who opposed Trump for the Republican presidential nomination last year, gave a speech Wednesday on his goals for tax legislation during an event sponsored by the Tax Foundation, a Washington policy group. He called for simplifying the tax code, cutting tax rates to spur growth and, for individuals, instituting a single tax rate in place of the existing seven.
“We need tax reform to benefit everyone, to lift people’s after-tax incomes,” Cruz said. With a nod toward the House Republicans’ plan, he said: “Three is better than seven, and by the way two is better than three and one is better than two.”