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May 25 2017, 08:52 | Alonzo Simpson
A Russian thinktank controlled by Vladimir Putin's government crafted a written plan "to swing the 2016 USA presidential election to Donald Trump and undermine voters' faith in the American electoral system", reports Reuters, citing three current and four former US officials. "The process has begun long ago but the reform will begin on Wednesday", Efe news service quoted Trump as saying.
"The tax code has become extremely expensive and burdensome", Treasury Secretary Steve Mnuchin told reporters yesterday morning.
His announcement surprised Capitol Hill and left Mr. Trump's own Treasury officials speechless as he arrived at the Treasury offices to sign directives to roll back Obama-era tax rules and financial regulations.
So, given what a gnarly beast tax reform is, it's understandable that it's taken the president a while to find his silver bullet. They would need at least 60 votes to get such a tax measure through.
While Trump has used 15 percent as the baseline for his corporate tax cut pledge, the House GOP leadership initially suggested using 20 percent as the starting point for negotiations.
Trump has promised to release the outlines of his tax plan Wednesday and has said the plan would give Americans a tax cut bigger than "any tax cut ever".
Mnuchin said the global economy continues to exhibit large and persistent external imbalances, "which contribute to the sentiment that the existing worldwide monetary and trading system does not benefit all".
A White House spokesman didn't immediately respond to a request for comment. There likely aren't enough business tax breaks that could be repealed to offset the fiscal cost, meaning such a move would increase budget deficits.
Still, lawmakers from both parties have said the corporate tax rate must be reduced to help USA companies compete with firms headquartered in other countries and to prevent US firms from moving overseas.
Mnuchin on Thursday said economic growth from proposed tax cuts would come close to $2 trillion over 10 years.
Both Trump and Mnuchin have promised that the overhaul of the tax code they are planning would be the biggest since the Reagan administration. This is a problem for Republicans because it means they would need Democratic support in the Senate to pass a tax overhaul that significantly cuts corporate taxes. There are very few policy ideas more unpopular than lessening the tax burden of rich people; except, perhaps, for raising them on middle-income households.
The Wall Street Journal first reported that Trump wants to include a 15% corporate tax rate in Wednesday's announcement. "Tax reform is way too complicated", he said.
One reason why overhauling the tax code is so hard is because it is very hard to do it without dramatically widening the deficit. While some Capitol Hill budget hawks reflexively oppose deficit spending, Trump has always been perceived as being more open to debt financed government spending.
"You can either have a small tax cut that's permanent or a large tax cut that is short-term", Mulvaney said.
While it might be comforting to think that Republicans might abandon Trump in the wake of an economic disaster created by his tax policies, there are two things to note: Conservative Republicans are still locked in a suicide pact with Brownback even as Kansas sinks and Brownback himself still managed to eek out reelection.
Trump's push for unveiling his tax plan began last week during several meetings in the Oval Office where he expressed his frustration with the slow pace of legislation on several fronts, including taxes, according to two officials who were not authorized to speak publicly. The response, in a word, is heartening.