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.”
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House Republicans Hoping to Get Americans Back to Work By End of April
It’s a aspiration, not a plan.
House Republicans are considering plans that would help Americans get back to work by the end of the month. Kevin Brady of Texas told reporters on a conference call that the caucus is preparing preliminary plans that phase the workforce back in at the end of April.
“Our focus is on locking down the virus while we’re taking the steps now to prepare to reopen the economy by the end of the month if the virus permits.”
Brady was careful to qualify that there’s no guarantee the public health situation in the United States would allow such a development.
“I think we should all expect the jobs, the unemployment in the GDP numbers to feel brutal over the short term. It’s because they are. This economy is taking hits like we’ve not seen in most of our lifetimes. But it is just a short-term hit.”
Initial social distancing guidelines set forth by the White House in conjunction with the CDC were extended from two weeks to April 30th earlier in the week, suggesting the executive branch may be cautiously looking towards the end of April to begin phasing out the unprecedented disruptions to everyday American life.
It is worth noting that an early cease to social distancing and commonsense measures to deter the spread of the Chinese coronavirus could prove to be even more harmful than the negative impacts to the economy since the beginning of the virus-related recession. This can’t be rushed. But the consequences of the economic damage are real, and all Americans should look to get everyday economic life up and running against as soon as possible.
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