Wyoming’s two U.S. Senators praised a $5 trillion Republican effort announced Wednesday to reform the nation’s tax code, slash corporate income taxes and possibly reduce the amount paid by individuals, while also simplifying the tax system and doubling the standard deduction used by most Americans.
The plan, which is backed by President Donald Trump, is sweeping in scope but omits critical, controversial details that are likely to take months to work out in a bitterly divided, GOP-led Congress. The political stakes are high for Republicans and for Trump, whose agenda has largely stalled as the GOP abandoned efforts to repeal the Obama-era health law. Republicans see tax overhaul as a once-in-a-generation opportunity that could produce a large political payoff, though some polls show the public is skeptical that average Americans will benefit much.
Wyoming’s senior U.S. Sen. Mike Enzi, chairman of the budget committee, praised the plan for “providing pro-growth tax relief” and reducing the burden on corporations.
“The United States has one of the highest corporate tax rates in the world,” Enzi said in a statement. “But we can make America a more inviting place to invest, do business and create jobs by lowering our high tax for businesses here at home.”
Sen. John Barrasso, R-Wyoming, also praised the plan’s attempt to simplify the tax process. Barrasso highlighted the amount of time that Americans currently spend completing tax forms — six billion hours per year, he said — and the associated cost of $263 billion annually.
“The people who can deal with this level of complexity are the ones who basically can afford to hire expensive accountants and lawyers — who then take full advantage of a very complicated tax code,” Barrasso said in a speech Wednesday morning.
Simplifying the tax code is a goal with bipartisan support, but other details in the plan are likely to divide lawmakers in Congress.
There are no details on how much the plan would cost, though back-of-the-envelope estimates by outside experts put the tax cuts in the range of $5 trillion over the next 10 years. The net cost to the federal debt would be far less — probably in the range of $1.5 trillion under a deal put together by Senate Budget Committee Republicans — and the real battles will come as lawmakers quarrel over which tax breaks might be eliminated to help pay the balance.
“Too many in our country are shut out of the dynamism of the U.S. economy, which has led to the justifiable feeling that the system is rigged against hardworking Americans,” states the blueprint. “With significant and meaningful tax reform and relief, we will create a fairer system that levels the playing field and extends economic opportunities to American workers, small businesses and middle-income families.”
The plan would collapse the number of personal tax brackets from seven to three.
The individual tax rates would be 12 percent, 25 percent and 35 percent — and the plan recommends a surcharge for the very wealthy. But it doesn’t set the income levels at which the rates would apply, so it’s unclear just how much of a tax change there might be for a typical family, and whether its taxes would be reduced.
Trump maintains that his plan will benefit the middle class, not millionaires and billionaires.
“My plan is for the working people and my plan is for jobs,” he told reporters. “No, I don’t benefit,” he said, adding, “I think there’s very little benefit for people of wealth.”
But Democrats swiftly condemned the plan.
“Each of these proposals would result in a massive windfall for the wealthiest Americans and provide almost no relief to middle-class taxpayers who need it most,” Senate Minority Leader Chuck Schumer, D-N.Y., said at the Capitol. “It seems that President Trump and Republicans have designed their plan to be cheered in the country clubs and the corporate boardrooms.”
Due to the limited amount of information provided on Congressional financial disclosure forms and unanswered questions in the plan itself, it is unclear how the proposed reforms would affect members of Wyoming’s delegation.
Barrasso’s net worth is between $3.7 million and $14.7 million, according to his 2014 disclosure form. Enzi has a net worth of between $484,000 and $1.6 million, according to his 2017 form.
Wyoming’s lone U.S. House Rep. Liz Cheney disclosed assets of between $2.75 million and $8.8 million.
Cheney, a Republican, released a brief statement that was generally supportive of the themes that the GOP plan focuses on: lowering taxes and simplifying the tax code.
“Cutting taxes is crucial to generating economic growth and making sure folks in Wyoming keep more of their hard earned money,” Cheney said.
The plan would nearly double the standard deduction to $12,000 for individuals and $24,000 for families. This basically would increase the amount of personal income that is tax-free.
Deductions for mortgage interest and charitable giving would remain, but the plan seeks to end most other itemized deductions that can reduce how much affluent families pay.
Wyoming could benefit
A battle is already brewing among Republicans over a move to eliminate the deduction for state and local taxes, which is especially valuable to people in high-tax states such as New York, New Jersey and California. Republicans from those states are vowing to fight it.
Residents of Wyoming, which has no personal income tax, would be unharmed if the deduction is eliminated. Critics of the local and state tax deduction have argued that it effectively forces people in low-tax states to subsidize those who deduct regional taxes from their federal bill.
The plan would retain existing tax benefits for college and retirement savings such as 401(k) contribution plans.
It would seek to help families by calling for an increased child tax credit and opening it to families with higher incomes. The credit currently is $1,000 per child.
Also proposed is a new tax credit of $500 to help pay for the care of the elderly and the sick who are claimed as dependents by the taxpayer.
The estate tax — which is paid by those with multimillion-dollar inheritances — would be eliminated, a boon for wealthy individuals who inherit businesses, investments and real estate. Also slated for elimination is the alternative minimum tax, a supplemental tax for certain individuals, corporations and estates that enjoy exemptions.
Companies would find themselves paying substantially lower tax rates, part of an effort to make U.S. businesses more competitive globally. The plan would impose a new, lower tax on corporate profits stashed overseas, and create a new tax structure for overseas business operations of U.S. companies.
Corporations would see their top tax rate cut from 35 percent to 20 percent. For a period of five years, companies could further reduce how much they pay by immediately writing off their investments.
New benefits would be given to firms in which the profits double as the owners’ personal income. They would pay at a 25 percent rate, down from 39.6 percent. This creates a possible loophole for rich investors, lawyers, doctors and others, but administration officials say they will design measures to prevent any abuses.