Don’t Look Now, but GOP Tax Plan Just Hit First Roadblock
It has barely been a day since the GOP announced their tax plan, but that didn’t stop Republican infighting over the individual deduction for state and local taxes.
Republican In-Fighting Continues
With more than $1 trillion at stake, House Republicans from high-tax states such as New York and New Jersey have already voiced their concern over state and local deductions. There are currently 33 House Republicans representing high-tax states. If they stick together, they can force a complete re-write of the tax plan.The GOP can’t afford to lose more than 22 Republican votes if it intends to pass reform, according to The Wall Street Journal.
President Donald Trump has grown accustomed to defections, but a disunited Republican party on matters related to tax reform could be a huge blunder. Illinois Republican Peter Roskam told reporters that members with concerns from high-tax states must be heard.
The GOP has failed multiple times to repeal and replace Obamacare. There is a growing concern that tax reform may prove just as elusive.
GOP Tax Plan Will Pay for Itself: Mnuchin
U.S. Treasury Secretary Steven Mnuchin says that the GOP tax overhaul would more than pay for itself through economic growth, which would cause tax payments to rise. This is a major pillar of President Trump’s economic agenda, which seeks to produce 3% annual growth.
Although many analysts doubted him, Trump’s plan no longer seems all that far-fetched. The U.S. economy grew 3.1% annually in the second quarter, the Commerce Department’s revised GDP report showed Thursday. That was the biggest quarterly gain in more than two years. Growth likely waned in Q3 thanks to Hurricanes Harvey and Irma, but should be back on track for the holiday season.
Engineering 3% growth has been extremely difficult. It eluded the Obama administration even with the Federal Reserve orchestrating a massive pro-growth campaign.
In its most recent forecast, the Fed called for annual growth of 2.4% in 2017. That’s higher than the 2.2% annual rate policymakers predicted in June. Long-term, policymakers expect the economy to grow less than 2% annually.