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Trump Tax Talk Preview: Light On Details, Heavy On Populism

Courtesy of ZeroHedge. View original post here.

Will be leaving for Missouri soon for a speech on tax cuts and tax reform – so badly needed!

— Donald J. Trump (@realDonaldTrump) August 30, 2017

Later this afternoon, at 2:30pm to be exact, President Trump will take the stage at the birthplace of 'Mainstreet USA', Springfield, Missouri, to kickoff his push for tax reform.  But, if you're expecting details on exactly what your future effective tax rate might be and/or how your mortgage interest deduction might be impacted, then you're likely in for a 'yuge' disappointment. 

As Politico points out this morning, Trump's tax speech has been drafted by White House aide Stephen Miller, the leader of the nationalist arm of the White House staff, as oposed to Chief Economic Advisor Gary Cohn which means it will be heavy of the populist flare and light on the details.

President Donald Trump will launch a major push for a sweeping tax overhaul with a speech Wednesday in Missouri aimed at convincing his base — and the rest of the nation — that he has a fresh vision for “unrigging” the American economy and isn’t just repackaging the trickle-down economics of past Republican presidents.

Wednesday’s speech in Springfield is being built around the sale of tax reform as a populist policy, according to five senior administration officials.  The tax speech is being drafted by senior White House aide Stephen Miller, a leader of the nationalist wing of the administration.

“One of the keys to selling tax reform is the president making the point that tax reform will unrig this economy by stripping out the special-interest deductions and carve-outs that riddle this code,” said Tim Phillips, president of Americans for Prosperity, a group founded by the billionaire industrialist Koch brothers that is spending heavily to push changes to the tax code.

“This won’t be a speech about specifics but instead about the case that we have to get growth faster and wages faster and get people to focus on that and the impact on workers’ take-home pay,” a senior White House official said. “It’s about faster growth on the corporate side and making the individual side much simpler and easier.”

After a briefing with White House aides yesterday, Axios similarly framed today's tax speech as the "why not how" speech:

A "why not how" speech: Trump won't mention specific tax rates or show his hand on controversial issues like whether to allow companies to fully expense equipment; instead he'll explain why tax reform is needed.

Theme: "Springfield is the place where Route 66, commonly referred to as the Main Street of America, got its start," said an official on the call. "And now it's going to be the place where America's Main Street begins its comeback."

Bottom line: Many of the big issues on tax reform remain unsettled; and tomorrow's speech by the president won't provide any clarity on those. The White House wants Congress to take the lead and own these difficult decisions — e.g. the fight over full expensing — but expect Trump to put more gusto into his tax reform sales pitch than he did with health care. (He's genuinely enthusiastic about tax cuts whereas he never was with health reform. Whether he can remain focused, however, and avoid detours into rants about "fake news" and his myriad enemies, is another question.)

Trump

Meanwhile, after an abysmal failure on the Obamacare repeal effort, it seems that the Trump White House is becoming better at the whole 'political thing' and has even polled which phrases are best for selling tax reform to the public.

In Trumpian style, he'll try out new phrases for selling the policy like "Jump-start America" and "Win again."

Republicans have polled the phrase “tax reform is about unrigging the economy,” and it’s done well with swing voters, people familiar with the data said. Treasury Secretary Steven Mnuchin has been using the phrase repeatedly.

So what actual details might we get, if any?  Beyond highlighting a couple of deductions that may be eliminated (sorry about that electric car deduction, Elon) and calling for 'lower' tax rates for corporations and middle-income folks, not much.

The speech is expected to frame the issue around wiping out some deductions that benefit mostly higher-income taxpayers, making the U.S. corporate system more globally competitive and simplifying the individual system. He is expected to discuss lower rates for middle-income taxpayers as an instant pay raise for everyday Americans, while arguing that lowering the corporate tax rate would make it easy for companies to expand — improving Americans' quality of life.

Trump, however, is not expected to go into much detail about deductions and loopholes on Wednesday as congressional Republicans and the White House continue to haggle over which ones to target. The administration is leaving much of the detailed work to Hill Republicans on the major tax-writing committees.

Among possible deductions that the White House could support eliminating are those for the use of electric cars, historic preservation and fashioning a ranch into a cattle-breeding facility.

Some Senate Republicans and the White House want to continue the practice of businesses deducting the cost of investments along a steady schedule, which could allow for a bigger cut in the top corporate rate from its current 35 percent level, administration officials said.

Of course, the real question is whether tax reform is even possible given the fractured Republican party in the House and a very narrow Republican majority in the Senate.  Certainly recent history would suggest not so much.


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