Republicans Propose Deep Cuts In Individual And Corporate Tax Rates President Trump and GOP congressional leaders outlined plans for the most sweeping tax overhaul in more than three decades. Mary Louise Kelly talks to Republican Rep. Dave Schweikert of Arizona.
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Republicans Propose Deep Cuts In Individual And Corporate Tax Rates

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Republicans Propose Deep Cuts In Individual And Corporate Tax Rates

Republicans Propose Deep Cuts In Individual And Corporate Tax Rates

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MARY LOUISE KELLY, HOST:

Let's dig in on what could amount to the most sweeping changes to the federal tax code in more than three decades. This is the tax plan President Trump and Republican leaders in Congress are putting forward. Here's President Trump making the case for it in Indiana.

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PRESIDENT DONALD TRUMP: This is a revolutionary change and the biggest winners will be the everyday American workers as jobs start pouring into our country - as companies start competing for American labor and as wages start going up at levels that you haven't seen in many years.

MARY LOUISE KELLY: So that's the president. Here is a taste of how Democrats are responding. This is Ron Wyden, top Democrat on the Senate Finance Committee.

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RON WYDEN: What has been released today makes a total mockery out of the president's pledge that he wanted tax relief to be for the working-class, and it wouldn't be for the wealthy.

MARY LOUISE KELLY: Now I want to bring in Republican Representative Dave Schweikert of Arizona. He's a member of the House Committee on Ways and Means, which co-authored the legislation. And he spent all day yesterday huddling with colleagues and talking taxes all day. You survived, Congressman, and you're here this morning. Welcome.

DAVID SCHWEIKERT: You know you're in trouble when that's your idea of joyful fun. It is...

MARY LOUISE KELLY: (Laughter).

SCHWEIKERT: Yeah. I mean, it's like hanging out with all the kids who used to be the president of their high school math club.

MARY LOUISE KELLY: And here you are. And I want to ask you - I want to start by asking you about this comment we just heard from President Trump that the big winners here are going to be everyday American workers. Are the richest Americans also big winners from this tax plan?

SCHWEIKERT: Yeah. That actually is not in the math. And what's broken my heart a bit is we've actually worked very hard on the distributional curves. And some of the rhetoric doesn't match the math. Look, we're working for simplification. We're working for fairness. But one of the key components - and maybe the key component - is economic expansion, economic growth.

Whether it be on the right of the left, we have a social entitlement crisis coming. It's driven substantially by demographics that if we do not get substantial economic expansion over this next decade, the following decade is going to be very ugly.

MARY LOUISE KELLY: But if you look at the math, if you look at the numbers in this proposal, it's cutting the top individual tax rate. It's slashing the corporate rate.

SCHWEIKERT: Well, it's slashing the corporate rate, which is where we get - from all the modeling, where we get the substantial portion of the economic expansion, which we're desperate for. And what's fascinating in the corporate tax rate, turns out about 70 percent plus of even that tax benefit ultimately goes to workers and their paychecks and their pensions and - or their ability to save as well as growing the size of the economy, which actually gives us a substantially larger tax base.

MARY LOUISE KELLY: But if you are a wealthy business owner if - like President Trump, for example, how do you not benefit from this tax proposal?

SCHWEIKERT: Because actually within there goes the removal of lots of the deductions. Remember, as we use the word simplicity, we're actually trying to get rid of a lot of the distortionary effects of different things in the code. So if you actually look at...

MARY LOUISE KELLY: This also eliminates the estate tax, though, which benefits rich Americans. There's a lot in there.

SCHWEIKERT: Yeah. But if you actually look at the utilization of the deductions, it's concentrated in the highest income earners in this society. So, look, there's a bit of a duplicity out there. And I accept some of this is just modern politics - is I'll have some of my friends on the left saying the wealthy need to pay their fair share, except for my wealthy. And you can't have it intellectually both ways.

So is removing the distortions that are many of the deductions lowering the rates making it much simpler so about 90 percent of the society can pay their federal income taxes on a postcard. I don't really know intellectually how you argue against that.

MARY LOUISE KELLY: And I know there are a lot of details that are to be determined as you all work through on Capitol Hill exactly how this tax plan will take shape. But let me turn you to this other central question which is, can you do this without blowing up the deficit?

SCHWEIKERT: Yeah. And there's actually where we've worked so very, very hard in the math. Look, the Senate appears to be doing a slightly different mechanism of saying they're going to create a trillion and half dollar box over 10 years. Well, remember...

MARY LOUISE KELLY: Of how much the deficit would go up if this plan takes...

SCHWEIKERT: No. No. No. No, the cost of the plan. And then within there, we will backfill - even this evening on the floor, I'm going to do a whole presentation on how dynamic scoring works. But if you think about it, this is a fraction of GDP over the 10 years.

The stimulus from several years ago under President Obama was seven times bigger as a percentage of GDP. And the very people who are criticizing on this side were wholly supporting it on that side and the dynamic scoring. So just struggling for a little intellectual consistency in the discussions.

But if we do not get the economic growth - the expansionary effects - understand how much trouble we're in in the near future. We actually just don't have a choice. We must do something to grow this economy.

MARY LOUISE KELLY: Representative Dave Schweikert, Republican of Arizona, thanks so much for joining us.

SCHWEIKERT: Thank you for having me.

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