The dome of the U.S. Capitol Building is reflected in a puddle on a rainy morning in Washington.
Kevin Lamarque/Reuters

Behind closed doors, Republicans add a new tax break for the rich

Updated

Donald Trump and his team insisted that any Republican tax plan lower the corporate rate from 35% to 20%. The president declared publicly that the 20% rate was “very much a red line” he would not cross. Trump’s Treasury secretary, Steven Mnuchin, added soon after, “The president’s number one issue that is not negotiable is 20% corporate taxes.”

GOP lawmakers have reportedly agreed to cross Trump’s “red line,” though the White House won’t mind – because the president will approve of where the money’s going.

Republicans in the House and Senate have reached an agreement in principle on their sweeping tax package that will slash individual and corporate rates, White House and GOP sources said Wednesday.

Once the details are ironed out, Republicans hope to have a vote in the Senate first, then the House, with the legislation done in Congress by next Wednesday, a White House official said. It can then be sent to President Donald Trump for his signature.

Two Republican sources familiar with the outlines of the deal confirmed to NBC News that the corporate tax rate would be cut to 21 percent, while the top tax rate for individuals would drop to 37 percent from 39.6 percent.

At face value, this is a difficult move to defend. The Republican tax plan is already wildly unpopular with the American mainstream in large part because the public believes – accurately – that the plan is stacked to favor the wealthy. In response, GOP officials met behind closed doors and agreed to … wait for it … cut taxes for the wealthy even more.

All of this also belies the White House’s assurances that the Republican blueprint isn’t a giant giveaway to the richest Americans. That rhetoric was absurd before the revised version of the GOP plan, and it’s even more ridiculous now.

But just below the surface, the politics of this get even messier.

During the recent Senate debate over the tax plan, some senators, including some Republicans, pushed for a slightly smaller corporate tax break in order to help finance other priorities. Sen. Marco Rubio (R-Fla.), for example, took the lead on a proposal that would have lowered the corporate to around 21%, instead of 20%, with the difference going to finance an expanded child tax credit.

GOP leaders, however, refused. The 20% corporate rate was a line in the sand. Republicans, en masse, simply wouldn’t tolerate anything higher, no matter how well intentioned various proposals might have been. To go above 20% would be a betrayal of party principles and an attack on future economic growth.

And yet, here we are, watching those same Republicans agree to a 21% corporate rate in order to finance more tax cuts for the Americans who already have the most.

It’s modern GOP policymaking in two sentences: Republicans can accept a slightly smaller corporate tax cut to help the rich, but not to help working families. Trump’s “red line” can be crossed in order to extend more benefits to those at the top – but for no other reason.

GOP leaders probably realize that some of their members will think this is a mistake, but those same Republican leaders assume that rank-and-file GOP lawmakers are weak enough to be pushed around. They’ll do what they’re told and support the party’s plan because it’s the party’s plan.

And by all appearances, those assumptions about members’ spinelessness are correct.

Tax Policy and Tax Reform

Behind closed doors, Republicans add a new tax break for the rich

Updated