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Passing a tax cut should be easy with a Republican Congress.

Doyle McManus mug

Doyle McManus | Los Angeles Times

After all, lower taxes are one of the pillars of the GOP faith, one of the few core principles holding the fractious party together. And the tax cut President Trump just unveiled, in his words, is “giant, beautiful, massive — the biggest ever in our country.” What’s not to like?

Plenty, it turns out. Trump’s tax proposal is already running into trouble — largely because he’s making the same mistakes as in his long, failed effort to repeal President Obama’s health-care law.

Once again, our promoter-president has oversold his product. On health care, Trump promised better health insurance at a far lower cost; when he couldn’t deliver, public support for GOP bills evaporated. Now Trump is selling a tax plan he said would boost the middle class, not the wealthy — and that’s turning out to be mostly snake oil too.

“My plan is for the working people,” the president said. “There’s very little benefit for people of wealth.” Including, emphatically, himself: “I don’t benefit. I don’t benefit.”

If you complain about winter to anyone not living in SoCal, you’re sure to be met with eye rolls and the world’s tiniest violin. But you’re among friends here, so we’ll share a little secret.

Except he does. Trump and his family would benefit in at least four ways from his plan. The top tax rate on any regular income they earned would drop from 39.6 percent to 35 percent. The top rate on the profits of the Trump Organization, their family firm, would drop to an even lower 25 percent. They no longer would have to worry about the Alternative Minimum Tax, which cost Trump $31 million in 2005. And the president’s heirs no longer would face the estate tax, which could have cost them as much as $1.1 billion, according to the New York Times.

Other billionaires would benefit from those provisions too, and other breaks as well. So much for the wealthy getting “very little.”

For middle-class taxpayers, the impact has been harder to figure out because the details haven’t been settled yet. For most, it appears, there would be a tax cut somewhere between modest and negligible.

Not everybody would win. Tax experts said upper middle-class families with lots of itemized deductions could easily see their taxes increase.

Changes in the tax law almost inevitably create losers as well as winners, of course. But Trump and his aides have spent months pretending the inevitable won’t happen.

And just as in the fight over health care, the potential losers instantly formed lobbying groups to argue that they are being unfairly targeted.

It didn’t take long to find the most obvious losers: taxpayers in high-tax states like California, New York, New Jersey and Illinois, who would lose the deduction for state and local taxes. All those states went for Hillary Clinton in the 2016 election, making them easy targets for the Trump administration. But it turns out high-tax states have Republican members in Congress too — many of them from affluent districts where people pay, and deduct, income and property tax bills.

“I’m going to fight this out,” promised Rep. Tom MacArthur, a New Jersey Republican. “It’s not fair to give the entire country a tax break on the backs of citizens of these six or seven states.”

Others including Reps. Peter King of New York and Peter Roskam of Illinois promised to push back too. (No public objections so far from California Republicans, several of whom face tough races but want fundraising help from party leaders.)

On Friday, Gary Cohn, the White House’s chief economic adviser, said the administration would consider negotiating. State and local taxes are “not a red line,” he told Bloomberg television.

But if the administration retreats, that could open a new problem. Eliminating the deduction for state and local taxes was intended to pay for the proposal’s big tax cuts, so they didn’t simply add to the federal deficit. Until now, the self-proclaimed deficit hawks in the House Freedom Caucus have supported the tax plan, even though it could add as much as $2 trillion to the deficit over the next 10 years. It’s not clear whether they will accept even more red ink.

Just as in the case of health care, Republican leaders decided to try to pass this legislation through the process known as budget reconciliation — meaning they would need only 50 votes in the Senate instead of the usual 60. Instead of trying to negotiate a bipartisan bill through House and Senate committees, they chose, once again, to move forward with only GOP votes.

As a result, any determined opposition within their own party — from blue staters or the Freedom Caucus in the House, or any three Republicans in the Senate — can block the bill from moving forward. Furious, dramatic negotiations lie ahead.

Some kind of tax cut still appears likely to pass, for the simple reason that many Republicans believe their political survival depends on it.

“It’s the difference between succeeding as a party and failing,” Sen. Lindsey Graham of South Carolina said last week. “It’s the difference between having a majority in 2018 or losing it. It’s the difference between one term and two.”

But wait. Didn’t he say that during the health care fight, too?

Doyle McManus is a columnist for the Los Angeles Times. He can be reached at doyle.mcmanus@latimes.com.

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(19) comments

new2Lax

I imagine the reason for eliminating loopholes for the wealthy was to even out the playing field. It amounts to the same thing, a tax increase for those people. If you have no skin in the game which amounts to approximately 47% of the people, it should be easy to shake down the tax payers. Starting with a base of 47%, should be easy to get the folks paying very little on your side, slam dunk as they say. What a wonderful system.

new2lax2

My therapist said that my narcissism causes me to misread social situations. But I'm pretty sure she was just hitting on me.

patssy70

Don't get your underwear in a bundle over this. The only ones who will benefit from any so-called tax cut is Trump himself and his buddies.

new2Lax

The folks paying the most tax should get the most back, how is that not fair. Maybe the 47% who do not pay any tax should get nothing back and the top 47% get nothing back either, the middle 6% should get a huge tax break.

kingman10

its called recapitulation. Remember Warren Buffet? He pointed out that those in the top tax brackets rarely pay that rate. They have so many deductions their actual tax rate is much much lower. In fact Warren pointed out he pays a lower tax rate than his secretary. Now how is that fair? Oh the uber rich don't want to you to know about their little tax evading tricks. Fact is they are not paying their fair share.

MelloRedBuggVet2Lax

The folly of your semi-thinking is that the rich may end up paying less than many of us do.

kingman10

um if you are talking to me I'll answer that. Dah, yea, many of the rich do end up paying less than many of us do, many pay absolutely nothing. Ever hear of off shore accounts.

new2lax2

I think it is pretty cool how the Chinese people made a language entirely out of tattoos.

oldhomey

new2, the people paying the most taxes (and many who aren't but should be) are already getting "the most back". They live in a country that everybody pays into, one way or another, building a great infrastructure that makes possible the businesses and enterprises that corporations and billionaires make their vast fortunes on. And that includes education, health, safe water, clean air, communication, public safety, highways, waterways and the strongest military in the history of mankind. Without them, the money machine would stop. And we ALL pay into it, but some profit off of it far beyond the rest of us, and perhaps far beyond what their input would warrant. We need to have a fairer allocation of resources than what we are seeing, or people will rebel at paying into a system that makes only a few extraordinarily rich people comfortable while hundreds of millions feel like their future is in the hands of the roll of the dice.

patssy70

I already feel like my future is in the hands of a roll of the dice. And with Trumpoo in charge we won't have to worry about paying for safe water, clean air, heath waterways, etc etc etc. because there won't be any.

new2Lax

Everyone pays into. I think those paying no tax is approximately 47% and the majority get a refund. If you are willing enough to take risks to succeed, so be it, with these folks you have zip. They take all the risk, expand and create work for those not willing to do what they do. The risk takers are the ones that give these folks their military, education etc. Without these risk takers, it all would stop and they deserve to be able to make what they can for their risks. Work harder , make better decisions and you will have all the fairness you want, many decide to let others do the heavy lifting and just hope to be part of it and they seem to be satisfied with doing it their way. In a country like ours, all they can offer you and they do, is opportunity, you take it from there.

kingman10

"Everyone pays into. I think those paying no tax is approximately 47% and the majority get a refund" You just contradicted yourself in the first two sentences. Makes the rest of your paragraph incoherent and irrelevant.

oldhomey

new2, everybody pays taxes. If they rent, part of their rent goes to property tax. Everything they purchase that has a sales tax on it means they are paying taxes. If they ride the Greyhound they are paying gas taxes. If they see a movie they pay taxes. The risk takers? Like the people who engineered the mortgage meltdown? Some risk. Extraordinary payoff. Donald Trump? He was making millions right through his four casino bankruptcies while his creditors were all stiffed. Some risk. Some payoff. Either you have become dotty in your advanced years, causing you to make no sense, or you are and were a disgrace to the business you were in considering how nonsensical your positions are that you posit on these posts. I am voting for the latter.

johnnybragatti

Climaxhoax loves paying taxes,
I know they will love paying under Trump.
Like Buggs Repulsin.... and little Chips Manure,
they"re real Americans.

Slider

I love it when the author says "Tax cuts only benefit the wealthy". Tax cuts benefit those who "PAY" taxes. Duh!!!!!

Teddy Cruz

Aren't all taxpayers equal according to the Constitution?

Slider

Then everyone should pay taxes using the same rate (flat tax) which we know is not true.

kingman10

where does it say that in the constitution?

oldhomey

Well, Duhh!!! Slider. If you are happy to get an extra $300 next year while those making hundreds of thousand a year or more are getting back an extra $300,000, guess who is benefiting and who is a sucker?

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