WASHINGTON -- President Donald Trump on Saturday defended the Republican tax cut legislation as a good deal for the middle class.
"It'll be fantastic for the middle-income people and for jobs, most of all," Trump told reporters on the White House lawn before traveling to Camp David, Md., where he planned to meet with Vice President Mike Pence and Treasury Secretary Steve Mnuchin.
"And I will say that because of what we've done with regulation and other things, our economy is doing fantastically well, but it has another big step to go, and it can't take that step unless we do the tax bill," he said.
The tax overhaul legislation, which the GOP aims to vote on this week, would lower taxes on the richest Americans. Benefits for most other taxpayers would be smaller, but Trump called the bill a "Christmas present" for middle-class Americans, saying it would trigger job growth and push the economy beyond its current 3 percent rate of growth.
"I think we could go to 4, 5 or even 6 percent, ultimately," the president said. "We are back. We are really going to start to rock."
The nation last topped 5 percent growth in 1984.
The Republican plan is the widest-ranging reshaping of the tax code in three decades and is expected to add to the nation's $20 trillion debt. The tax cuts are projected to add $1.46 trillion over a decade.
The bill would offset the tax cuts in part by repealing an important part of President Barack Obama's Patient Protection and Affordable Care Act -- the requirement that all Americans have health insurance or face paying penalties. With more people opting out of health insurance, the government would spend less on subsidies to help insure them.
Sen. Marco Rubio, R-Fla., relented in his high-profile opposition after negotiators expanded the tax credit that parents can claim for their children. He said he would vote for the measure this week.
Sen. Bob Corker of Tennessee, the only Republican to vote against the Senate version earlier this month, says now that he will support the legislation. Corker, the chairman of the Senate Foreign Relations Committee, has repeatedly warned that the nation's growing debt is the most serious threat to national security.
"I realize this is a bet on our country's enterprising spirit, and that is a bet I am willing to make," Corker said.
The bill embodies a long-standing Republican philosophy that lower taxes for businesses will trigger economic growth and job creation for Americans, eventually paying for themselves with higher tax revenue. Skeptical Democrats are likely to oppose the legislation unanimously.
"Under this bill, the working class, middle class and upper middle class get skewered while the rich and wealthy corporations make out like bandits," said Senate Minority Leader Charles Schumer of New York. "It is just the opposite of what America needs, and Republicans will rue the day they pass this."
The bill would allow homeowners to deduct interest only on the first $750,000 of a new mortgage, down from the current limit of $1 million.
The deduction that millions use in connection with state and local income, property and sales taxes would be capped at $10,000. That's especially important to residents of high-tax states such as New York, New Jersey and California.
The standard deduction -- used by around two-thirds of households -- would be nearly doubled, to $24,000 for married couples.
Those three provisions upend decades of assumptions that society is better off with homeowners instead of renters. The increase in the standard deduction reduces the incentive to buy homes by making far fewer homeowners eligible for preferential tax treatment.
Today, a little under half of U.S. homes are worth enough to justify itemizing mortgage interest and property taxes. Under the tax legislation, that figure would fall to close to 14 percent, according to an analysis of the plan by the online real estate marketplace Zillow.
"It suggests a limit in the federal government's willingness to subsidize ownership," said Edward Glaeser, an economist at Harvard. "It's also a reflection of just how expensive housing has become, and how it feels problematic to be using the tax code to support people buying houses that are this expensive or, even worse, to be encouraging housing prices to rise further."
Both parties have long championed homeownership as a way to help people build wealth and keep neighborhoods more stable. But economists like Glaeser have been critical of the resulting subsidies.
In their view, the government has made homeownership and its financing artificially cheap through the tax code and mortgage backers like Fannie Mae. As a result, people are encouraged to take on more debt than they might otherwise -- to buy bigger homes and second homes, and to plow the equity they accrue into renovations and personal spending.
Critics say that because the benefits of interest deductions grow with larger and more expensive homes, the bulk of the benefits accrue to wealthier homeowners in pricier markets. This alters the landscape by encouraging more single-family homes and suburban sprawl. That, in turn, prompts the government to spend more on roads and infrastructure and makes housing a bigger portion of the economy than it would be in the absence of federal help.
All this has made homeowner subsidies, in particular the mortgage interest deduction, one of the rare tax breaks with critics across the political spectrum. Edward Pinto, co-director of the conservative American Enterprise Institute's Center for Housing Markets and Finance, has described the interest deduction and other homeowner subsidies as a wasteful giveaway that inflates home prices and encourages people to borrow excessively.
"My basic view is if you subsidize something, you'll get more of it, and as a country we've been subsidizing debt," he said.
TOP TAX BREAKS
Also under the bill, today's 35 percent rate on corporations would fall to 21 percent. Trump and GOP leaders had set 20 percent as their goal but agreed to 21 percent in order to fund other tax cuts that won over lawmakers in final talks.
"This is happening. Tax reform under Republican control of Washington is happening," House Speaker Paul Ryan of Wisconsin told rank-and-file members in a conference call Friday. "Most critics out there didn't think it could happen. ... And now we're on the doorstep of something truly historic."
The bill would also drop the 39.6 percent top rate on individuals to 37 percent.
The $1,000-per-child tax deduction would grow to $2,000, with up to $1,400 available in Internal Revenue Service refunds for families that owe little or no taxes. Parents would have to provide children's Social Security numbers to receive the child tax credits, a measure intended to deny the credit to people who are in the U.S. illegally.
Deductions for medical expenses that lawmakers once considered eliminating would be retained.
People who inherit fortunes would get a big break. The bill would double the exemption, meaning the estate tax would apply only to the portion of an estate over $22 million for married couples. In other words, a couple inheriting $50 million would pay taxes only on $28 million.
Members of a House-Senate conference committee signed the final version of the legislation Friday, sending it to the two chambers for final passage this week.
Information for this article was contributed by Jonathan Lemire, Stephen Ohlemacher, Marcy Gordon and staff members of The Associated Press; and by Conor Dougherty of The New York Times.
A Section on 12/17/2017
Print Headline: Trump lauds tax bill as middle-class boon