After months of secrecy and closed-door meetings, House Speaker Paul Ryan unveiled a framework for tax reform that didn’t have many new details yet seems to have brought the party’s biggest skeptics on board.
House Republicans, bused to a nearby retreat, heard the contours of a forthcoming tax reform plan that would simplify individual tax rates and include corporate tax cuts. There were a lot of unanswered questions.
At the retreat, Ryan’s framework was met with a standing ovation and Vice President Mike Pence’s praise: "This guy does not get enough credit," Pence told the Republican members.
By the afternoon, the House Freedom Caucus, which has been blocking any legislative movement on tax reform, came out in favor of the outline and said the caucus would support the 2018 Republican budget resolution — giving Republicans the procedural green light to move forward with tax reform.
Top Senate and House Republicans held a press conference that afternoon to talk about their “bold,” “pro-growth” tax plan that would revolutionize the American economy. Tellingly, they didn’t take any questions from reporters.
Only yesterday, Senate leaders had to tell the Republican conference once again they did not have enough votes to pass their Obamacare repeal bill. After nine months of failed health care negotiations, Ryan is eager to portray the GOP as a united front on tax reform moving forward.
But much like the tax reform plan they released, there are still a lot of details that need to be filled in.
The assumption is tax reform will be “far easier” than health care
Republicans are saying that tax reform is a much more “natural fit” for the majority party than health care ever was.
“I believe it’s going to be far easier for us to do tax reform than it was, say, for health care reform,” Ryan said during a CNN town hall in August, saying there’s more consensus in the party around tax reform — that the Senate rules wouldn’t hinder the debate, as they did with health care.
But while Republicans are unified in their goal to cut taxes, there is still debate in the party about how deeply to cut rates and which deductions to get rid of — or whether to offset those changes at all. Already one of Ryan’s proposals to offset costs — the border adjustment tax, which would tax foreign imports and exempt exports, raising money because the US currently imports more than it exports — has been nixed amid widespread opposition among congressional Republicans.
Wednesday was a major step toward tax reform in the House. For months the conservative Freedom Caucus has been refusing to vote for the 2018 budget resolution, which Republicans must pass if they intend to pass tax reform with a simple majority instead of 60 votes in the Senate.
In anticipation of a tax plan that would be at odds with their conservative agenda, Freedom Caucus members said they needed details on a tax plan before voting to unlock the legislative pathway to its fruition. Apparently this nine-page outline of a tax plan, which left out many of the most crucial specifics, has assuaged their concerns for now.
With the budget now unlocked in the House, Republicans are certainly one step closer to making good on their promise to cut taxes. But Ryan’s optimism might be tempered going forward, because now committees have to hash out the actual details.
There are still a lot of holes
As Vox’s Dylan Matthews explained, key aspects of this tax plan still have to be decided.
So far, we know Republicans want to cut the corporate tax rate and double the standard deductions. They want to “simplify” the individual tax rate from seven brackets to three (or four). They also want larger child tax credit and the estate tax eliminated. (Matthews has a more thorough explanation of what is included in this tax reform framework.)
But what we don’t know is more significant.
“It’s hard to know if the plan really is reasonable in cost, and really does hold the middle-class harmless, without more details, especially about what the brackets are and what their thresholds are,” Matthews writes. In other words, we don’t know how much this plan costs, whom it helps, and whom it hurts.
Right now, Paul Ryan is gaining praise from both flanks of his party. According to a top congressional aide, the finer details will be sorted out in the congressional committees of jurisdiction — an attempt to avoid the bad optics of the health care effort, which was largely driven by Republican leadership.
Ryan has tried to show that tax reform can bring the party together for now, especially after the health care fight. But work remains to be done.