With the House prepared to vote on the Senate’s version of a budget framework on Thursday, GOP leaders could start moving actual legislation slashing taxes and adding trillions of dollars to the national debt before the end of this month.
“This is a much faster thing than anyone expected,” said Grover Norquist, a longtime anti-tax activist who runs the powerful Americans for Tax Reform.
He added that even the conservative House Freedom Caucus, whose members have complained about increasing the national debt, are ready to a vote for the Senate budget, which permits a $1.5 trillion increase in the debt for the sake of tax cuts. “What used to be the ‘shutting down the government caucus’ is now the ‘let’s pass this thing’ caucus,” Norquist said.
Yet even Norquist did not know what GOP lawmakers would agree upon when it comes to the one piece of the package that will determine whether most American families will see any tax relief at all: the child tax credit.
It currently stands at up to $1,000 per child, and while the White House and Republican congressional leaders in Congress have promised to increase it, they have not stated what that the new level would be.
If the new amount is only $1,500, that would give middle-income families barely a tax cut at all ― a few hundred dollars per household for the bottom three-fifths of income earners, according to an analysis by the nonpartisan Tax Policy Center, which used the $1,500 figure in its assumptions.
If the credit remains at $1,000, it would mean a tax increase for most households with even one child, because the new plan eliminates the current $4,050-per-person tax deduction while increasing the “standard deduction” by $11,300.
Even more important to lower-income families is whether the larger child tax credit is made fully “refundable,” which it currently is not. Making that change would benefit the poorest families, to whom it would make the biggest difference, because their incomes are often too low for them to owe any income tax.
Norquist said this issue as well as some other “pay-fors” ― elimination of existing tax breaks to make up for revenue lost by rate reductions ― are still being hammered out but that the central pieces of the deal are set.
Among the agreed-to elements: lowering the top corporate tax rate from 35 percent to 20 percent; lowering the top rate on so-called “pass-through” small businesses from 39.5 percent to 25 percent; and cutting the top individual rate from 39.6 percent to 35 percent.
“I’m reasonably pleased,” Norquist said.
Norquist said he has also won commitments from House Speaker Paul Ryan (R-Wis.) and Vice President Mike Pence in recent meetings to move tax cut bills every year, not just this year. He said the promise of another bill next year will make it easier to win support from interest groups whose particular issue is not included in this year’s legislation.
“If there’s only one plane out of Casablanca, everyone’s got pretty sharp elbows,” Norquist said.
The Tax Policy Center analysis estimated that the tax cuts would add $2.4 trillion to the debt over a decade, with half of the total benefit flowing to the richest 1 percent of Americans.