Conservative lawmakers said any tax reform plan needs to benefit the middle class and begin to address the national debt.
“Let’s just focus on designing a tax code that does those three things: allows families to keep more of their money, simplifies a totally cumbersome and ridiculous code, and one that will foster and promote and is conducive to economic growth,” Rep. Jim Jordan, R-Ohio, said Tuesday at Conversations With Conservatives, a monthly press Q&A hosted by conservative lawmakers and The Heritage Foundation. “Focus on that, and we’ll be a lot better off.”
Republicans’ tax reform framework—presented Sept. 27 by House Speaker Paul Ryan, Senate Majority Leader Mitch McConnell, and other GOP leaders—seeks to significantly simplify the tax code.
“To deal with a debt of $20 trillion, you have to grow [the economy] at 3.5 or 4 percent, [and] you cannot grow for a sustained period of time at 3.5 or 4 percent growth unless you reform the tax code, so let’s just focus on that,” Jordan said.
The Republican tax plan calls for roughly doubling taxpayers’ standard deduction (an individual’s first $12,000 of income would become tax-free, as would the first $24,000 for married couples) and for condensing the current seven tax brackets to three.
Depending on their income, individual taxpayers currently are taxed at one of the following rates: 10, 15, 25, 28, 33, 35, or 39.6 percent.
The three tax brackets in Republicans’ proposed framework are 12 percent, 25 percent, and 35 percent. However, on Friday, Ryan said the tax plan will include a fourth bracket for high-income earners.
The framework would end personal exemptions for dependents, increase the child tax credit, and eliminate the estate tax, which opponents call the “death tax.”
Rep. Matt Gaetz, R-Fla., said he thinks Republicans will be better served once the tax plan is actually a bill.
“It seems to me this tax bill is like a political Rorschach test, and everybody stares at the inkblot and kind of sees what they want to see, because we don’t have a bill,” Gaetz said.
The Florida lawmaker said he is concerned that Republicans’ budget, which according to the House Budget Committee, “balances the budget within 10 years—without raising taxes—and puts the country on a path to paying off the national debt,” is not as good as it could be.
“I feel a particular obligation on this issue because I am one of the youngest members of Congress, and I think history is going to judge the young members of Congress the harshest if we facilitate a tax bill that isn’t paid for, and a budget that doesn’t have the aspiration to balance ever,” Gaetz said.
The vote on the budget, which creates the vehicle, reconciliation, through which lawmakers hope to pass tax reform with 51 votes, is expected Thursday. However, some are questioning the passage of the budget over whether or not the final tax plan will eliminate the state and local tax deduction.
Eliminating the deduction would provide roughly $1.3 trillion in new tax revenue, Politico reported, but lawmakers from some districts that are highly taxed in places like New York say taxpayers in their districts count on the deduction and would see a tax increase if the state and local deduction is scrapped. Some lawmakers are threatening to not vote to pass the budget if the deduction remains eliminated in the tax plan.
“There would need to be more progress made in figuring out the solution on this issue in order for me to vote for the resolution on Thursday,” Rep. Lee Zeldin, R-N.Y., said.
Rep. Scott Perry, R-Pa., said tax reform is needed to return to American taxpayers what is rightly theirs.
“I fundamentally think that our taxpayers, it’s their money first,” Perry said. “I never subscribed to that whole thing about giving it back to them. We shouldn’t take it from them in the first place.”
Rep. Mark Walker, R-N.C., chairman of the Republican Study Committee, said the House should forge ahead with working to pass tax reform despite delays or obstacles the Senate may see.
“If we ever get to the place where we are legislating based on what the Senate may or may not do, it’s not a good day for America,” Walker said.