Club for Growth President David M. McIntosh announced Tuesday he has significant reservations about Speaker Paul D. Ryan Jr. (R.-Wis.)’s current tax reform bill now making its way through the House Ways and Means Committee.
“While the corporate tax cut will lead to some increase in our nation’s Gross Domestic Product, the rest of the provisions on individual taxpayers fails the pro-growth test,” McIntosh said.
“Republicans must correct at least four serious shortcomings of the House bill to follow through on campaign promises and to bring our nation closer to a tax reform proposal that is truly pro-growth,” he said.
“No. 1, the millionaires’ tax rate: House Republicans are engaging in class warfare the likes of which would make Democrats green with envy. Instead of following through with the promise of taking seven brackets and simplifying them to three, Speaker Paul Ryan and Chairman Kevin Brady added in a fourth bracket exclusively for millionaires,” he said. Rep. Kevin Brady (R.-Texas) succeeded Ryan as chairman in the fall of 2015, after Ryan took the speaker’s gavel.
“No. 2, the 45.6 percent “bubble” phantom tax increase: As The Wall Street Journal noted, some individuals and couples could face up to 45.6 percent marginal rate on earnings between $1.2-1.6 million. That’s a real tax increase on successful people who invest and create jobs,” he said.
“No. 3, pass throughs: Once again, Republicans fail the truth in advertising test here. At first glance, the House GOP bill looks as if it introduces a degree of tax parity for small and family-owned businesses by taxing them at 25 percent. But then there’s a catch, only the first 30 percent of their income will be taxed at the 25 percent rate, the remaining 70 percent is taxed as much as 45.6 percent,” he said.
“The blended, real effective marginal rate is at least 35 percent and can even be higher,” said McIntosh, a former Indiana congressman. “That means no tax cut at all for most small business and family-owned companies.”
McIntosh said he was confused about why Ryan would insist on fourth flaw.
“No. 4, the death tax: Instead of taking this golden opportunity to rid Americans from being taxed even after they’ve died – on assets that they already paid taxes on when living – the House Republican plan waits a full six years before repealing it. Our question is, why wait?” he asked.
“All in all, this bill must be changed if Republicans intend to keep their promise of real pro-growth, job-creating tax cuts.”