The tensions between the Trump administration’s populist win and its more traditionally Republican establishment types have been well-documented in recent months. And now, more than two months after Treasury Secretary Steven Mnuchin and National Economic Council chief Gary Cohn unveiled an outline of the administration’s tax-reform ambitions, another battle between the two wings appears to be brewing.
Trump’s chief strategist Steve Bannon is said to be pushing to raise the top tax rate on individuals, with Axios saying the former Breitbart CEO would like the top rate to have “a 4 in front of it” – currently, the highest income-tax bracket in the US is 39.6% for individuals earning more than $414,000 a year.
Some officials – code for Mnuchin, Cohn and the other members of the more traditionally corporatist (or rather Goldmanist) wing of the Trump administration – believe Bannon’s ideas are crazy. But Bannon believes raising taxes on the wealthy could help the administration boost its populist bona fides, an angle which Trump appears to be actively pursuing once again having recently failed with his more traditional fiscal reform push. But as tax reform is shaping up to be a must-win for the Trump administration, it would hardly be a surprise to see Bannon’s plan shelved in favor of across-the-board cuts that would help rally the Republican Party’s conservatives to support whatever reform package Trump ultimately presents.
Cohn and Mnuchin reportedly view tax reform as a top priority for the administration. However, as Axios notes, time to pass comprehensive reform is quickly running out.
- Lobbyists who have met with Gary Cohn and Treasury Secretary Steven Mnuchin say they’ve been struck by how impatient the two appear:
- Cohn has told associates that if tax reform doesn’t get done this year, it’s probably never going to happen.
- Sources who know Cohn speculate that he’ll leave the White House the instant he concludes tax reform is dead.
- While Cohn and Mnuchin differ stylistically — Cohn is brash and physically imposing while Mnuchin is mild-mannered — sources who’ve been meeting with them say they share the same philosophy: Go big or go home.
Ironically, Cohn and Mnuchin are warming to an idea that Bannon supported in the aftermath of the election, when he claimed that he’s “not a conservative” and said he would support spending packages that blow out the deficit, arguing that the US should rebuild its infrastructure now while interest rates are low. Mnuchin, for his part, has refused to promise that tax reform wouldn’t lead to wider deficits when he and Cohn unveiled the outline for the administration’s reform plan back in April.
Cohn and Mnuchin aren’t bluffing when they say they want to slash the corporate tax rate to 15% from the current 35%. Neither man has any interest in timid tax cuts, and they wager that special interests will relinquish their loopholes if they become convinced their tax rate really will be in the teens.
- They’re becoming far less wedded to revenue neutrality — the idea, favored by House and Senate Republican leadership, that tax cuts mustn’t add to the deficit.
- They’re increasingly tantalized by an idea some conservatives (like Grover Norquist and Sen. Pat Toomey) are pushing: Allow major tax cuts to last longer than 10 years without having to balance the budget.
- Conservatives like Toomey favor a more expansive 20- or 25-year period. But top White House officials are more cautious, and are said to be weighing a 15-year period.
The last time the US passed comprehensive tax reform, the legislative battle took two years. Thus, a new theme is emerging that applies not just to tax reform, but to Trump’s agenda more broadly: Do it now, or let it go.
Context: The last time Congress passed major tax reform, in 1986, it was a two-year rollercoaster. This time, the White House officials driving the process have concluded there’s no chance of getting Democrats to support what Trump wants to do. So, they believe it must be done before the 2018 midterm elections or not at all.
That’s going to be a heck of a challenge. They need to first pass a budget, which is embroiled in fights over defense spending and welfare reform. And they need to finish with health care. Some top Republicans have come to believe, contrary to conventional wisdom, that tax reform stands a better chance if health care fails — so desperate will Trump and Republican leaders be for a victory.
The x-factor here, of course, is Trump. How does he feel about raising taxes on the wealthy? And, more importantly, is Bannon succeeding in moving the Trump administration in a more populist direction, following Trump’s decision to largely abandon his protectionist rhetoric? A few more tweets from the president should provide the answer.
I doubt taxes could be raised enough to cover the current deficits, much less start paying down the total debt.
There are so many factors involved in the debt that it has become a self sustaining thing that is growing of its own accord without much, if anything, that can be done to stop it since we now have an economy that is dependent on it to continue functioning.
If anyone has any realistic ideas about how to get it under control without bring the whole system down, I’d certainly like to hear and discuss what you have to say.
Anon…………..any realistic idea to get the deficit under control would not be able to pass in CONgress.
We need the Flat or Fair Tax – current system allows Corp’s to profit in the Billions and pay ZERO taxes. This would also eliminate 90% of IRS.
Which leads me to smaller Gov’t, which Trump is pursuing (one has to be realistic how much can be accomplished in reductions), even by eliminating a few Dept’s.
Which leads me to Regulations, which Trump is pursuing.
A small Gov’t means less corruption, less theft, less cost, less waste.
When you have 17 Intelligence Agencies instead of 1 or 2 or 3, something smells fishy.
The problem isn’t the size of the federal debt, the problem is “money” as debt. Central banks and money-as-debt, are the crux of the problem. They’ve had a century to distort and corrupt, every nook and cranny of our markets (including government).
I don’t think it can end in anything but disaster and that might well be by design, as suggested by many others.
That’s what no one seems to realize.
If you, say, retire 20 trillion of debt by paying it off you remove 20 trillion dollars from the economy.
That has to be considered in any valid discussion of taxation and debt, otherwise the unintended consequences of getting rid of deficit spending and debt will kill us before we realize we just killed ourselves by doing it.
I don’t know who down voted you but you’re exactly right. Debt based money is borrowed into existence but not the interest, meaning it is scarce by design. And that doesn’t even include any lending done outside the banking industry, which doesn’t even create additional new money. It is a Ponzi scheme and always needs more growth/participants (borrowers), to keep the game going.
If government were to pay off the national debt, cut off the welfare spending, fire the unproductive government employees, etc. the whole Ponzi would collapse. The private sector and state/local governments don’t have printing presses, so there is a natural limit on their growth. I think we’re far past those entities growing any longer so the Feds will continue to. More federal debt, more agencies, more war, etc. Grow or die.
The Fed’s have a natural limit too but it is on the other side of a SHTF, currency collapse. We’ll have much bigger problems to deal with, by the time their “dollar” loses “Full Faith & Credit.”
I don’t recall ever hearing Bannon was a proponent of this type of tax increase ever before. Is this article correct or is it a B.S. planted lie. There are so many other ways to go about tax reform, I just didn’t think he fell into the mainstream liberal ideology of hitting the “rich”.
“Trump’s chief strategist Steve Bannon is said to be pushing to raise the top tax rate on individuals ……”
I’m sure this has been confirmed by “sources” or Durden wouldn’t have published it.
Well every 4 years we get politicians saying they are going to end the carried interest loophole, and yet it never happens. I guess we know who writes the really big donation checks.
“Comprehensive tax reform” is as complicated as “comprehensive immigration reform” and just as stupid. The low-hanging fruit was all picked in the ’80’s – halving the nominal rate and radically paring back deductions. Now they should just do one thing at a time: cut the corporate rate to 18-19% (starts with a “1” and roughly matches Canada, Ireland). Phase out deductibility of mortgage interest on mortgages >$1/2 mil. Phase out deductibility of State and local taxes (this is the bigee and will have to be traded for a modest cut in income tax rates). Big savings in spending should come from “defense” (quotation marks fully intended) and prosecuting medical collusion and price-fixing (a’la Denninger).
Federal govt needs to get out of the student loan business completely – and remove the special protection against student loans being discharged in bankruptcy.
10% for all taxpayers . Could be calculated in two or three seconds by the taxpayer, written down on a postcard formatted return, slap on a stamp and mail in to the evil empire. So simple a caveman could do it.
Corporations should have to pay their fair share and I would add that no individuals would be exempt over $600 in income. And a permanent cap of 10% should be in place.
How many and which corporations actually pay no taxes?
Ones that make actual profits, there are no taxes due when losing money.
The ones that have all their cash on deposit parked in Ireland for instance.
Bannon is exactly correct. Going further the real outrage is that these people, if they’re retired and are over 62, are also getting Social Security. Why not means test for SS benefits as I’m sure these fortunate, well off Americans can make it without SSI?? Oh but they contributed just like everyone else so how could I suggest something so “unfair,” you’re thinking?? Well for these people we’ll call their contribution an increase in taxes just because they’ve been so financially…successful. There I’ve killed two birds with one stone – no SSI for rich retirees and they (the rich) will be paying higher taxes because of that which sounds great to me.
Someone else paying for everything always sounds great and will always appeal to those with no character. The schools and media have relentlessly destroyed the character/culture of the country so self reliance is now not even considered. All that matters is what is in it for me. Hard to beat that as a campaign slogan and that is why the country is doomed. We have gone beyond “what can the rich pay for so I don’t have to” to “what can I sign the kids up for in SS and public pensions so I can spend and consume more on my lifetime than I earned”. And yet the liberals think they have the high moral ground because they push the identity/victim politics agenda.