President Trump has dropped an ambitious overhaul of the nation’s tax system. As correspondent Matt Laslo reports, Virgnia lawmakers are giving the plan mixed reviews.
President Trump is trying to go big on taxes. He’s proposing taking the corporate tax rate from 35 percent down to a cool 15 percent, which Northern Virginia Democrat Don Beyer says seems to be a giveaway to the wealthiest in the nation.
“I’m a little concerned if corporations are 15 and there are still a lot of individuals at 25 or 30. I’m particularly concerned that so many American businesses, especially the small businesses that dominate metropolitan D.C. aren’t big corporations, they’re LLCs," Beyer says. "They’re law firms, they’re small technology companies, they’re home products, and those need to be treated the way corporations are also.”
The White House also wants to do away with many deductions, like the popular state and local tax deduction. By some estimates, the plan could cost more than six trillion dollars over the next decade, which Beyer says is unacceptable math.
“That’s a really hard issue. Take as a given that we don’t want to blow the deficit up, it’s already 20 trillion dollars. So if we’re going to cut the rates, something has to give," Beyer says. "You can either raise on something else, maybe the high wage earners or you can get rid of some of the so-called tax expenditures. The biggest one is home workers’ interest and no one wants to do that.”
But Southwest Virginia Republican Morgan Griffith says the overall plan will create economic growth, which would offset the deep tax cuts.
“Now you know, we have to look at cutting some spending, they’re right about that. If you adopt the whole plan, it does not do that because you have some offsets so you get some revenue from economic growth and you get some revenue from the new tax structure,” Griffith says.
Even many Democrats want to lower the corporate tax rate but going from 35 percent down to 15 percent may be hard, which Griffith admits.
“Broadly I would support it. I don’t know that we can get to 15 percent," he says. "But you know let’s negotiate. Start at the high end, I think 20 or 22 percent is more realistic. But I do think it’s a huge job creator.”
Freshman Virginia Republican Congressman Tom Garrett echoes that chorus.
"Obviously any negotiation starts off with a forward and first offer and I think that’s where we are," he says.
And even in this hyper partisan and highly bitter climate in Washington, Garrett says the two parties should be able to reach an agreement on taxes.
“Ultimately, President Obama acknowledged that our corporate tax rate was detrimental to economic growth," Garrett says. "And a lot of my colleagues on the other side of the aisle have publicly acknowledged that. If they choose to go back on their word then so be it but I don’t think the President’s married to 15 percent - that was his opening offer.”
Eliminating deductions could bring political ramifications from both interest groups and individuals. But Garrett says that’s not his concern.
“We need to stop worrying about what’s politically risky and start worrying about what’s right. If we can simplify the tax code, we ought to work to simplify the tax code. So I’m lock-step with the president on that,” he says.
The president and the GOP are still focused on getting health care reform out of the Senate, which seems like it will prove to be a monumental task. But if Trump signs the first broad tax overhaul in more than three decades, many say that would be even more monumental.