WASHINGTON — House Speaker Paul Ryan promoted the Republican tax reform plan on Thursday as a means to “lower tax rates at every income level for families,” but Democratic leaders fired back a few hours later, emphasizing that ending state and local income tax deductions would be “disastrous” for couples earning less than $100,000.
“The last year brought up a lot of new hope. If we choose to do nothing, we allow people struggling to get by to become the permanent normal,” Ryan told an audience at the conservative Heritage Foundation on Thursday morning.
“The central tenants of our plan are very clear: Our plan will lower tax rates at every income level for families,” he said. “It will deliver the lowest tax rates in modern history for [skilled laborers] of all sizes. End the death tax, repeal the alternative minimum tax and eliminate the marriage penalty.”
House Democratic Leader Nancy Pelosi and other House Democrats countered Thursday afternoon, addressing the “disastrous effects” of the decision to terminate the state and local income tax deduction, which they said would raise taxes on families.
“It is not tax reform,” Pelosi said. “Half the people that would be hit earn an annual household income of under $100,000. The more than 6 million households that use this credit spread through blue districts and red districts. And tax exposure would be increased by thousands of dollars.”
But Ryan said the tax unfairly forces the rest of the country to support high-tax and high-spending states like California and New Jersey.
“The general interest is going to have to trump over the special interest,” he said.
Ryan noted that tax writers in both Finance and Ways and Means committees are working to fill in all the details of what he said was a simplified tax plan.
Richard Neal, the top Democrat on the House Committee on Ways and Means, rejected the notion that the deduction is a blue state-only priority.
“It would load as much as $1.3 trillion a year in new taxes on the back of the American family,” he said.
“Under our framework, the first $12,000 for a single individual and the first $24,000 for a married couple will be tax free,” Trump said. “Remember, you’ll do your tax on a single piece of paper. H&R Block will not like Donald Trump very much.”
Initial analysis from the Tax Policy Center at the Urban Institute and Brookings Institution found that the plan would “significantly increase” the child tax credit above its $1,000 current value, but how much that increase would be is yet to be presented. Ivanka Trump, an adviser to the president who has spearheaded the administration’s child tax credit expansion, has been meeting with bipartisan lawmakers and experts in recent weeks to produce the new policy.
At his weekly press conference Thursday morning, Ryan affirmed his sense of urgency for a solution by the end of the year.
“Half this country is living paycheck to paycheck. If that means we have to stay until Christmas, then tough,” he said. “This has to get done, and we have a solution.”