Taxes

McConnell hits brakes on tax reform, despite bullish Trump team

Strategy Room: Judy Kurtz gives her take on the White Houses agenda

 

Always the policy bridesmaid, tax reform once again is taking a back seat as Congress debates ObamaCare repeal legislation. Senate Majority Leader Mitch McConnell on Thursday played down expectations that any tax package can be completed before the August recess, despite Trump administration vows to pursue “historic” legislation soon.

“I think finishing on tax reform will take longer,” the Kentucky Republican said in a Politico Playbook interview. “We do have to finish the health care debate … before we go to taxes.”

McConnell addressed the dual goals of health care and tax legislation as his party allies work feverishly on the House side to advance a newly released replacement for the Affordable Care Act, amid bipartisan criticism.

While that, too, is a top Trump priority, the president’s team has been equally bullish about the prospects for tax reform – with Treasury Secretary Steve Mnuchin just weeks ago setting August as the goal. The White House swiftly pushed back on McConnell’s timeline Thursday.

“We feel very confident that we're going to get a lot done -- continue to get a lot done this year. Tax reform is high on the president's priority list,” Press Secretary Sean Spicer said.

He said Trump is “committed” to this and “you're going to see Secretary Mnuchin and others work on the contours of that in the next several weeks.”

Asked if August was still the goal, he said, “That’s right.”

In his address to a Joint Session of Congress, President Trump vowed “historic tax reform” that cuts taxes for businesses and the middle class. In early February, Trump said they were “ahead of schedule” and getting ready to announce a plan in the coming weeks. He told Fox News’ Bill O’Reilly he hopes to push through tax cuts before the end of the year.

Mnuchin specifically cited the August recess goal in a CNBC interview in late February. And speaking with Maria Bartiromo on Fox News’ “Sunday Morning Futures,” the secretary said tax reform is the No. 1 economic goal for the administration.

"On the personal side, it's really about tax simplification -- fewer tax brackets, simpler taxes and creating a middle income tax cut," Mnuchin said. "That's really the focus on personal taxes. And on business taxes, it's really about making U.S. companies competitive.”

McConnell on Thursday would not venture a prediction on when tax reform could be completed, noting it is “complicated” work to determine which tax preferences can be eliminated to produce the revenue to offset the impact from lower rates. Further, he predicted Democrats would not participate in the discussions given “this has not been a kumbaya moment here” at the start of the Trump administration.   

“Basically, it’s a Republicans-only exercise,” he said.

While it’s unclear what the formal tax proposal may look like, Trump during the campaign called for lowering the corporate tax rate from 35 percent to 15 percent. He also called for simplifying the tax code, collapsing the seven current brackets down to four, with the highest rate at just 25 percent, down from 39.6 percent.