President Trump gives every indication he is pressing forward with a tax reform plan that slashes rates for all taxpayers — including the wealthiest Americans — despite Democrats’ steadfast opposition to letting the top 1 percent of earners keep any more of their money.
But Mr. Trump, usually not a man to shy from a fight, has resisted engaging Democrats in the class warfare they’re waging against his plan.
White House officials also tiptoe around the issue, acutely aware of how susceptible the first billionaire businessman to occupy the White House is to accusations that he is showering tax cuts on Wall Street cronies and rich golf buddies.
“His top priority is to provide tax relief to middle-class Americans. The president and key leaders from Congress and the administration remain unified in their desire to enact historic tax reform that is pro-growth, pro-jobs, pro-worker and pro-America,” a White House official said when pressed to defend tax breaks for 1-percenters.
Grover Norquist, the preeminent advocate for tax cuts who is closely allied with the Trump administration on reform plans, said the president didn’t need to answer Democrats’ criticism because it was only a ruse.
“No Democrat intends to cast a deciding vote for tax reform. Full stop. Period,” he said. “This is an old, redundant, pathetic, stupid argument by Democrats. They always say it is a tax cut for rich people, but they are against cutting taxes for everybody. And they like to divide people into different groups so they can mug them one at a time.”
He noted that Democrats always vow to help the poor and middle class, but from taxes on cigarettes to taxes in Obamacare, they don’t hesitate to put the squeeze on Americans on the bottom half of the wage scale.
“We are tying to cut taxes to get economic growth and to simplify the code. The Democrats want to raise taxes in order to spend more money,” said Mr. Norquist. “They like tax hikes. They want to spend the money.”
Republican strategist and pollster Chris Wilson of WPA Intelligence agreed.
“The ‘1 percent’ issue doesn’t resonate with voters as the Democrats have cried ‘wolf’ on class warfare one too many times. Voters just don’t buy it anymore and are more likely to vote their own pocketbook than to try and keep money out of someone else’s,” he said.
A survey his firm did for GOP-allied Definers Public Affairs found support for tax reform topping 60 percent in 10 key states that Mr. Trump won and where Senate Democrats are up for re-election.
The highest support — more than 70 percent — was in four states that Mr. Trump won by double digits and where incumbent Democrat senators are particularly vulnerable: West Virginia, Montana, North Dakota and Missouri.
Details of the reforms are still being hammered out with Republican leaders in Congress, but the goals are the same ones Mr. Trump campaigned on.
He wants to simplify the tax code, reduce rates for businesses and individuals and eliminate most deductions. Several popular deductions, including mortgage interest and charitable donations, would remain in place.
The plan always included reducing the number of tax brackets to three from the current seven, while bringing down rates at every level. The scope of each bracket and the size of the rate cuts are among the unfinished details.
The president and Capitol Hill GOP leaders are expected to roll out the bill within weeks.
Proponents of tax reform make several agreements in favor of across-the-board rate reductions, not the least of which is that the wealthy pay most of the taxes.
The top 1 percent pays the largest share of individual income taxes, 39.5 percent, compared to the 29.1 percent paid by the bottom 90 percent, according to IRS data from 2014, the most recent numbers available.
Many in the top 1 percent — those making more than $386,000 a year — also are small business owners who file individual income tax returns and are subject to the top rate of 39.6 percent.
Mr. Trump touched upon the issue when stumping for tax reform last week in North Dakota, saying he would dramatically reduce taxes for job-creating small businesses.
“Tax relief is on the way for millions of sole proprietors, LLCs and partnerships who report their income on their personal [taxes] — and they do this. They put it on their personal tax returns. People think of it as a business, but it’s on their personal tax returns,” he said. “Those people with those businesses will be tremendous beneficiaries.
He didn’t lump them in with the rest of the 1 percent or even acknowledge the Democrats’ attacks on tax cuts for the rich.
That fight isn’t on the horizon for Mr. Trump and the “Big Six” administration and congressional leaders crafting the plan — it’s already here.
Senate Democrats made denying rate cuts to the top 1 percent of taxpayers a top demand in their Aug. 1 letter to the president laying out their terms for a tax reform deal. All but three of the chamber’s 48 Democrats singed the letter.
They also ruled out use of a Senate budget rule known as reconciliation to pass it with 51 votes, not the usual 60-vote requirement to overcome a filibuster.
Senate Republicans haven’t veered from their plan to use reconciliation either.
Senate Minority Leader Charles E. Schumer and his Democratic team repeatedly described the GOP plan in terms of rich versus middle class.
Mr. Schumer doubled down on the demand after striking a deal with the president for emergency disaster funding linked to a short-term debt limit increase and spending to keep the government open until mid-December.
The New York Democrat said he wanted more bipartisan dealmaking but said he wouldn’t budge on tax cuts for the 1 percent.
“If they are aimed at the middle class, it would be great. If they’re aimed at the very top 1 percent, it won’t be great. We’ll see,” said Mr. Schumer.
A coalition of liberal groups last month launched the “Not One Penny” campaign to oppose any GOP plan that cuts taxes for the very wealthy or corporations. It has spent $1 million on TV ads targeting Republicans in eight congressional districts.
When Mr. Trump went to North Dakota, the group launched a five-figure television ad buy targeting the state’s Republican Sen. John Hoeven and Democratic Sen. Heidi Heitkamp, who is up for re-election next year in the pro-Trump state and has cozied up to the president’s tax plan.
David Borris, a leader of the Main Street Alliance, a liberal business group in the coalition, said voters wouldn’t be fooled by disguising tax cuts for the rich as reductions for small businesses.
He said the vast majority of those benefiting from tax cuts are hedge fund managers, lawyers and real estate developers — not small businesses such as his Hel’s Kitchen Catering in Northbrook, Illinois.
“It is another gift to Wall Street and the wealthy 1 percent. Small businesses like mine need customers more than anything else, and President Trump’s plan to pay for these cuts by gutting Medicaid, Medicare, Social Security and education will be catastrophic for local economies and the customer bases that we small business owners rely upon,” said Mr. Borris.
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