What comes out on Thursday will be the fine print. And despite the president’s bravado, Republicans on Capitol Hill recognize the steepest climb remains ahead of them. “Make no mistake, all hell’s going to break loose when that House bill becomes public,” Senator John Kennedy of Louisiana told CNN. “It’s taking a big ole piece of cheesecake and putting a bunch of spinach on top and saying, ‘You can’t eat the cheesecake ’til you eat the spinach.’”
The House bill will still have to survive a markup in the Ways and Means Committee next week, and Senate Republicans are working on their own proposal, though it’s expected to be broadly similar. Thursday’s announcement, however, will provide answers to several important questions that have vexed Republican legislators for months.
Here are a few of the big ones:
Who Will Pay More?
Despite the president’s apparent preference for a clean tax cut, the House Republican proposal will be a broader and more complicated shift in who owes what to the government. And that means, as GOP leaders have reluctantly acknowledged, that some people will actually see their taxes go up. “Yes, some Americans probably will” pay more, House Majority Leader Kevin McCarthy conceded on Fox News. “Because you know what we do? We close the loopholes.”
The nitty-gritty revealed in the GOP plan will allow news sites and think tanks to develop calculators that show exactly who wins and who loses. Politically, it could cut two ways. If those analyses show that the wealthier will pay more, the tax bill would become more attractive to some Democratic senators and make it easier for Republicans to pass. But the indications so far are that in some states, it’ll be the middle and upper-middle class that gets hit, either because of proposed changes to 401k retirement plans or the elimination of the federal deduction for state-and-local taxes. And if that’s the case, the GOP plan becomes a much tougher sell.
How Do the Rich Fare?
The treatment of the wealthy has been one of the more interesting subplots of the Republican tax-reform drive, revealing both philosophical and strategic differences within the party. Led by Speaker Paul Ryan and Ways and Means Chairman Kevin Brady, the supply-side conservatives writing the House bill believe in lowering the top marginal tax rate to encourage investment and new hiring, and they reject Democratic arguments that the rich should pay more—no matter how popular they may be—as class warfare.
If Ryan and Brady get their way, the highest income-tax bracket would go back down from 39.6 percent to 35 percent, where it stood during the George W. Bush administration before President Barack Obama demanded that Congress raise it on income above $400,000 a year. But Trump, who ran as a populist, is sensitive to attacks on the GOP plan as a giveaway to the wealthy. At his insistence, Republicans included a possible fourth bracket for the highest earners in the framework they released last month, and Ryan has said that will probably stay in the bill. It’s likely to keep the top rate at 39.6 percent, but possibly only for income above $1 million or a higher threshold than it is currently.