While Republicans projected unity Wednesday as the Trump administration announced its tax reform plan, the White House and House Republican leadership issued differing assessments of the desirability of settling for a temporary tax cut, rather than a comprehensive revision of the tax code.
Trump administration officials indicated that temporary tax cut was an acceptable outcome, while House Republican leadership staked out opposition.
“The goal is to make it permanent but, you know, there’s lot of levers here,” Treasury Secretary Steven Mnuchin said Wednesday morning. “And, you know, if we have them 10 years, that’s better than nothing, but we’d like to have permanency to it.”
While views among Republicans differ and some say that they would be willing to accept a scenario in which Trump signed legislation that provided only temporary tax cuts, the lawmakers most responsible for taxes in the House resist the idea.
“It would be a mistake at this juncture to step back and not recognize the inflection point we are at not recognize the momentum on tax reform we have right now, and to say, we ought to give this everything we’ve got trying to make it permanent,” said Rep. Peter Roskam of Illinois, speaking at a conference hosted Wednesday by the law firm BakerHostetler. Roskam is chairman of the tax subcommittee of the House Ways and Means Committee.
A temporary tax cut would be an “underperformance,” he said.
The appeal of a temporary tax cut is that it could be accomplished with only a simple majority in the Senate through the budget process known as reconciliation. The procedure would mean that the tax reforms would be temporary, however.
President George W. Bush implemented his tax cuts through reconciliation, ultimately leading to the “fiscal cliff” at the end of 2012, in which President Barack Obama successfully ended the portion of the cuts that applied to high earners.
Republicans have drawn different lessons from the experience with the Bush tax cuts.
Rep. Kevin Brady of Texas, chairman of the Ways and Means Committee, argued that temporary tax cuts are not as pro-growth as permanent reform. Permanently lowering rates and simplifying the tax code, the thinking goes, allows investors and executives to plan along a greater timeline.
“If it is permanent, and it is good tax reform, that’s where you get the greatest years of growth,” Brady said Wednesday in an interview with MSNBC.
For business taxes in particular, temporary tax cuts don’t work, House Speaker Paul Ryan has insisted. The Bush tax cuts applied to individuals.
Yet Rep. Steve Scalise, the House Republican whip, praised the Bush tax cuts when asked about temporary tax cuts by the Washington Examiner Wednesday, even as he said that his preference would be for permanence.
“They were really good, they reduced rates,” Scalise said of the Bush tax cuts, “but there was this cliff. Anytime you’ve got a government-created cliff, it gives you less certainty than if you have permanence.
“Regardless, you’re going to get a strong positive bounce in the economy and job creation if you cut taxes,” Scalise added, “but if you can do it on a permanent basis, it would be better.”
