This week, the U.S. House of Representatives passed a budget resolution that makes it possible for Republicans to overhaul the tax code with no Democratic votes.
But the resolution contained no details about what that change would look like.
Meeting with business owners and officials in Pottstown, Pennsylvania on Friday, U.S. Sen. Pat Toomey, R-Pennsylvania, assured the group that more specifics are on the way.
“We think, next week, the House will unveil their version of this tax reform, and that’s going to create quite a stir, you know,” he said. A week after that, the Senate is expected to unveil its version. Toomey said he anticipates the plans to have the same thrust, but many different details. They will need to come into alignment to meet the aggressive goal of passing sweeping tax legislation before 2018 — a feat not accomplished since 1986.
So far, Republicans in Congress have been working from a tax “framework,” which promises to cut the corporate tax rate to 25 percent or lower; streamline filing for individuals taxpayers by reducing the number of tax brackets from seven to three; and eliminate most individual deductions in favor of a larger standard deduction.
Over coffee and fruit salad in a conference room at VideoRay LLC, a small business that makes remotely operated underwater vehicles, Toomey also reassured the Republicans assembled that the party can deliver on this part of its agenda.
The dozen elected officials and business owners at the meeting said they support the gist of the plan — if not all of the details.
For example, eliminating popular deductions, such as state and local taxes, may prove difficult if support for those deductions doesn’t transfer over to a new plan.
“If you take something away that people are familiar with, you’re relying on them to trust the government to make them whole, and it just seems to me that’s a lightning rod,” said state Rep. Tim Hennessey, R-Montgomery. New Jersey Republican Congressmen Tom MacArthur and Frank LoBiondo were among those voting against this week’s budget resolution because their constituents want to keep the deduction.
Greg Herb, president of Herb Real Estate, Inc., said removing a deduction for mortgage interest could further depress homeownership for the middle class, a downside for his business.
Toomey, who said the larger standard deduction will make up for lost deductions, said the public will have time to see and debate the details before a plan comes for a vote.
Addressing concerns about the impact of the changes on the middle class, Toomey said “We’re not going to have a net tax increase on that segment of the public that you are referring to. I know, when you look at parts of the framework, it looks like it could turn out that way.”
Toomey also acknowledged that the push for a new tax code takes place in the shadow of a failure. Republicans have been unsuccessful, in spite of a majority in both houses and a Republican president, in their other attempt at marquee legislation: replacing the Affordable Care Act.
Toomey reassured his audience that that would not happen again with the tax plan, which has a greater consensus among Republicans.
“You can’t fail on both,” he said.