Taxes Keep GOP Together

27 Oct, 2017

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Barely a week before they are about to unveil a new federal tax code, GOP members continued to bicker over a few components of their plan. The skirmish over retirement savings and also about cutting an acceptable deal with lawmakers elected from SALT or high tax states. All must go well for the Republicans during the critical budget vote. The tax issue in all respects is the sole factor keeping Republicans together.

SALT

Republicans from the SALT (state and local tax) states are making the process much harder. One of them is Rep. Peter T. King from New York. He said that their only way to gain control is to defeat the budget. The SALT state Republicans are afraid that once the budget is passed, they will be sidelined. Republicans from SALT or high tax states said that GOP members have asked them to vote for a bill which they have never seen. The vote will be given only on the promise that the tax bill will be a fair one. They cannot envisage anyone voting for such a plan.

The GOP is desperate to find common ground for all members. Members understand what works for every Republican is the slashing of taxes. No wonder, Republican leaders are losing sleep over drafting the bill. This was in clear evidence on October 25, when President Donald J. Trump and senior House Republicans publicly sparred upon whether the proposed plan will be inclusive of sharp reductions in the amount of money an average US citizen would save in their 401(k) accounts prior taxes. Congressional leaders in the meantime tried to make a compromise on the local and state tax deductions. These will be required by the House to pass budget measures required to make sure that the tax bill does not get entangled in a Democratic filibuster in Senate.

Minimizing loss

Republicans are trying to minimize the revenue loss effects that invariably comes with the slashing of tax rates. This is specifically applicable for President Trump's push to minimize tax rates from 35 percent to 20 percent. The White House is rigid on this stand, saying it is non-negotiable. The proposed budget resolution includes an additional deficit of $1.5 trillion from the tax cuts over the next decade. The rates of tax proposed will cost about two trillion. It is evident tax cutting unites the GOP, but locating offsets by allowing for accounting tricks or deductions divide them.

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