President Trump’s tax reform speech Wednesday will be “light on substance, heavy on populism,” Axios reports .
Tax reform presents Republicans with extremely similar traps to the ones they did not see coming on healthcare.
In particular, a White House official told Axios the president will call to end “the special interest loopholes that have only benefited the wealthy and powerful few” so the president can pay for tax cuts.
That sounds good in the abstract. So did “insurance for everyone” that is “much less expensive and much better.”
We shouldn’t forget he made a populist sale of his healthcare plan, too – and it stopped working once Congress started having to put detail of the plan into legislative text.
Another populist promise that can’t be met
What does the president mean by “special interest loopholes” that he can close to pay for tax cuts?
“Among possible deductions that the White House could support eliminating are those for the use of electric cars, historic preservation and fashioning a ranch into a cattle-breeding facility,” Politico reports .
Of course, those deductions are tiny and scrapping them would barely raise any revenue for cutting rates.
If a deduction is big enough to matter, it will have a powerful lobby fighting to keep it. And if the deduction is in the individual tax code, a lot of regular taxpayers who use it will bristle at the idea that they are a “special interest” or among “the wealthy and powerful few.”
In April, top White House adviser Gary Cohn and Treasury Secretary Steven Mnuchin talked about eliminating all itemized deductions in the personal income tax except those for mortgage interest and charitable deductions.
So who would lose out if these deductions get eliminated? What “special interests” get their oxen gored under this proposal? Well, let’s look at this handy table from the Tax Policy Center that outlines the 13 largest federal tax expenditures for 2016. (A “tax expenditure” is revenue the federal government foregoes by choosing not to tax a certain kind of income, or taxing it at a preferential rate.)
This list underscores the surprisingly narrow scope even of the White House’s opening bid on tax reform, before the special interests swarm in to protect the deductions they use. Amazingly, at least 11 of the 13 items on TPC’s list would be untouched by Mnuchin and Cohn’s proposal.