Budget Resolution Passed In Senate Moves Tax Overhaul Forward
MELISSA BLOCK, HOST:
And we begin this hour with taxes. Republicans hope to move a tax overhaul bill quickly through Congress and have it on the president's desk by Christmas. No one has seen the bill yet, and many details are unclear. But President Trump has said he wants just three income tax brackets and major tax cuts. Conservative economist Stephen Moore advised President Trump on tax policy during the campaign. He's continuing to work with the White House on this tax effort. Welcome to the program.
STEPHEN MOORE: Hi, Melissa.
BLOCK: And I mentioned we've only seen a broad outline of this plan so far. But here's some of what we know. It would cut the top tax rate for individuals from 39.6 to 35 percent. It would cut the top corporate rate from 35 percent to 20 percent. So that's some of the contour of it. These have been longtime goals for Republicans. But as we know, so was repealing and replacing the Affordable Care Act. Republicans could not get that through Congress. How confident are you that the votes will be there on this tax plan?
MOORE: Well, Melissa, I'm more confident today than I was two weeks ago. I think that's true of most Republicans. You know, they passed a major - cleared a major hurdle on Thursday night when they passed the budget. Now, people are probably wondering what the budget has to do with this tax cut. And what the budget did was essentially enable this tax cut to happen. It allocates point $1.5 trillion over the next 10 years for the tax cut.
And it also allows the Republicans now to use this process called reconciliation, which means they can pass the tax cut out of the Senate with 50 votes. So now - as you said, now they have to construct the bill. They have a bill that - right now all the elements that you talked about, including the repeal of the death tax, other elements - that's about a $4 or $5 trillion tax cut. And yet they're allocated $1.5 trillion. So they've got to figure out how they're going to smush $4 trillion dollars in tax cuts...
MOORE: ...In a $1.5 trillion box. So we'll see how that happens.
BLOCK: Well, if this were to fall through, how devastating do you feel that would be for your party?
MOORE: If they don't get it done?
MOORE: Very devastating. I think it would be - and I think, actually, Melissa, that's why they were able to pass the budget on Thursday night - because I think it finally dawned on Republicans just as a political matter, we better get this thing done, or we're going to get wiped out in the elections, as voters believe that we are simply incompetent in terms of getting our agenda passed. So that's the sort of political rationale.
MOORE: But I think, also - look, I mean, Wall Street clearly loves this tax cut. We've had record highs on the Dow Jones, a roaring stock market. The economy generally is doing a lot better, I think, in part in anticipation of this. So I think there's an economic reason, as well, to get this done.
BLOCK: Well, Wall Street could be responding to a number of things, of course. But let me ask you this.
BLOCK: Democrats in a number of economists say these tax cuts will be a windfall if they go through for the wealthy. They say if you eliminate the estate tax, eliminate the alternative minimum tax, lower these rates, as the president would like, those only help those at the very top. And here's what the Senate minority leader Chuck Schumer said - the wealthiest Americans and wealthiest corporations make out like bandits, while middle-class Americans are left holding the bag. What's your response to that?
MOORE: Well, look, a couple things. First of all, this is really - I've always urged the White House to call this a jobs bill, not even a tax cut bill because I think the primary aim here is to get businesses and capital and factories moved out of the United States back to this country. You know, we've seen over the last, you know, five and 10 years a lot of companies leave the United States for Canada, for Mexico, for China, for Ireland because we do have a higher business tax rate than any country in the world.
And the whole philosophy behind this is, let's bring those tax rates from the highest in the world down to, you know, below the international average and create this kind of magnet effect where those businesses will come back. And if that happens, Melissa, the big beneficiaries of that will be American workers. There was a study that the White House Council of Economic Advisers came out with this week that estimates that for the average middle-class worker, this could mean a pay raise of about $4,000.
BLOCK: OK. We will have to leave it there. I know there are lots of disagreements over where we rank...
BLOCK: ...In terms of the corporate tax rate. But for now, we'll leave it there. Stephen Moore, an economist at the Heritage Foundation, the conservative think tank, thanks very much.
MOORE: Thank you, Melissa.
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