What’s on the table when it comes to the GOP tax overhaul plan

U.S. Vice President-elect Mike Pence (2nd L) joins House Republicans, including Representative Cathy McMorris Rodgers (R-WA) (L), Speaker Paul Ryan (R-WI) (2nd R) and House Majority Leader Kevin McCarthy (R-CA) (R).

The following is a transcript of a segment of NPR’s “Morning Edition” from April 10, 2017. David Wessel joined to discuss the GOP’s tax plan and what we know so far. Listen to the interview here.

It has been coming any day now. For weeks, the Trump administration’s been promising a major overhaul of the federal tax code – the taxes you and I and businesses and maybe even foreign manufacturers pay. And a small detail, the package is supposed to ease the budget deficit, too. But as that list of players and concerns might tell you, a lot of folks want a say in this. So when we want to talk about tax reform, we call one guy. His name is David Wessel, and he’s our regular economics commentator. Hi, David.
MARTIN: The tax code is big. It is crazy complicated. So when you say reform the tax code, what does that mean? What are they going to prioritize?
WESSEL: Well, right now almost all the focus is on the business side of the tax code – bringing down the corporate tax rate, which is one of the highest in the world, maybe allowing businesses to write off any investments they make immediately instead of depreciating them over time, maybe cutting taxes for partnerships and other businesses that pay at the personal tax rate. As you know, the House has a far-reaching plan that would tax things consumed in the U.S. – whether they were imported or domestically produced – but it would exempt exports.
Right now, that seems so politically divisive that the odds of surviving that are low. And you may have noticed, I haven’t said anything about the taxes that ordinary people pay. There’s been very little attention to that lately, even though Donald Trump promised to cut those, too. And it’s hard for me to imagine him signing a tax bill that doesn’t have at least some token tax cuts for ordinary people.
MARTIN: So ordinary people, average taxpayers, aren’t going to see any kind of effect on their lives this year?
WESSEL: I think it’s very unlikely. Gary Cohn, the head of President Trump’s National Economic Commission (ph), had been talking about getting a tax bill through Congress in August. Last week he said, it’s still my number-one priority, but August seems a little unlikely. At the rate they’re going, the earliest we’ll see a tax bill through Congress is at the end of this year or early next year. And there’s a chance that they won’t be able to agree on anything at all in that time. So don’t – save your money. You’re not getting a tax cut this year.
MARTIN: (Laughter) OK. Let’s talk about the politics of this. Health care reform was led by Congress, the Republican plan, House Speaker Paul Ryan, in particular. Who’s taking the lead on tax reform?
WESSEL: Well, Congress has taken the lead so far, particularly the House. The Senate has been moving very slowly, but clearly the White House and the Treasury learned something from the health care debacle – for them a debacle. And so we understand that both the White House, Gary Cohn’s shop, and the Treasury are working on tax plans, but we haven’t seen anything other than commentary and promises yet. So we don’t really know what’s in it.
MARTIN: The health care reform debate revealed all these divides within the Republican Party. What about tax reform? Are Republicans united here?
WESSEL: Absolutely not, and that’s one of the problems. As I said, the House has this bill that would adjust taxes at the border. The Senate doesn’t like it, and even some House Republicans don’t like it. There is a whole band of Republicans who worry about the deficit. And they’re worried about any tax cut that isn’t paid for with offsetting tax increases or spending cuts. But there’s another set of Republicans who thinks cutting taxes is more important than worrying about the deficit right now. And they know that it’s politically much easier to get a big tax cut through than a tax overhaul, which has lots of winners and losers.
MARTIN: And what about Democrats? Any chance the White House will want or need to reach out to them here?
WESSEL: Well, the White House talks about reaching out to Democrats, but Democrats have been sending very hostile signals on that. And I think part of the problem is Democrats would be interested in tax reform as long as it doesn’t shift the burden between rich and poor very much – or maybe even shifts it in the direction of the poor and the middle class – where most Republicans seem more interested in cutting taxes on business because they think that’ll improve investment, make the economy grow better, and it’ll get eventually to workers. So right now, I’d say there’s very little chance of Democrats joining this party.
MARTIN: David Wessel is director of the Hutchins Center at the Brookings Institution and a contributing correspondent for The Wall Street Journal. Hey, David, thanks so much.
WESSEL: You’re welcome.