Donald Trump touts tax reform, tells Congress to deliver

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US President Donald Trump said on Wednesday that Missouri should vote Democratic Senator Claire McCaskill out of office if she does not back his tax cut plan.
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Trump speaks about tax reform during a visit to Loren Cook Company in Springfield, Missouri. PHOTO: REUTERS

SPRINGFIELD, Missouri (REUTERS) - US President Donald Trump turned his populist rhetoric to tax reform on Wednesday (Aug 30), calling for "pro-American" business tax cuts as a way to create jobs and telling Congress that it needs to deliver.

Speaking at a manufacturing company in Springfield, Missouri, Trump called on Democrats to join his tax overhaul effort, which he said would also cut taxes and simplify the sprawling US tax code for the middle class.

But he offered few specifics, and tax reform will be an uphill task in Congress.

"We must reduce the tax rate on American businesses so they keep jobs in America, create jobs in America and compete for workers right here in America," Trump said in his first presidential speech specifically on tax reform, one of his key 2016 campaign issues.

Both congressional Democrats and Republicans say tax reform is needed but the Republican goal of enacting legislation this year faces a battle in Congress, which has already failed to deliver on healthcare reform sought by Trump.

Trump reiterated his longstanding call for slashing US corporate tax rate to 15 per cent from 35 per cent at a time when lawmakers believe they could be lucky to bring it down to 25 per cent.

Independent analysts and lobbyists are increasingly pessimistic that Congress can act by the end of 2017, and some believe final tax legislation could be more like a straight tax cut than a reform.

"I don't want to be disappointed by Congress. Do you understand me?" Trump said to cheers.

"I think Congress is going to make a comeback, I hope so. I'll tell you what, the United States is counting on it."

Trump said business tax cuts would lead to higher wages for workers by boosting economic growth and making American companies more competitive, an argument Democrats dismiss as more of the "trickle-down" economics that they blame for leaving workers behind in recent decades.

"If President Trump's previous tax plans are any indication, the wealthy and big corporations will be the ultimate winner," Representative Richard Neal, the top Democrat on the tax-writing House Ways and Means Committee, said in a statement.

There has been no comprehensive overhaul of the tax code since 1986.

Trump singled out Missouri's Democratic Senator Claire McCaskill, telling voters to throw her out of office in the 2018 midterm elections if she does not get on board with tax reform.

"So we must - we have no choice: We must lower our taxes. And your senator, Claire McCaskill, she must do this for you. And if she doesn't do it for you, you have to vote her out of office," Trump said.

McCaskill's office did not immediately respond to queries from Reuters about Trump's remark.


Republicans said Trump's speech would help underscore tax reform's priority in Congress, as lawmakers return next week to grapple a number of other vital issues including the US borrowing limit, disaster relief and government funding.

"We are united in our determination to get this done," House of Representatives Speaker Paul Ryan said in a statement.

But after more than seven months in power, Trump and Republican leaders who control both the US Senate and the House are still far from agreement on a tax package.

Initially expected in the spring, tax reform legislation now may not emerge until as late as November, lobbyists say.

Trump set out four tax reform principles: simplicity, a competitive tax code, tax relief for the middle class and international corporate tax reform.

"Each is perfectly laudable, and achieving any one of them is doable. But achieving all four, simultaneously, in the same bill will be incredibly challenging," said John Gimigliano, who heads federal legislative and regulatory services for the accounting and consulting group KPMG LLP.

Trump owes his November election victory partly to his ability to get working-class Americans to support a range of business policy positions, including his call for cutting the US corporate tax rate.

That connection makes Trump "uniquely positioned as a politician to make the case for an overhaul of the business side of the code and to frame it as being good for the American worker," said Rohit Kumar, a tax policy expert at accounting and consulting group PwC and a former senior Senate tax aide.

Trump will discuss a tax overhaul at a White House meeting next Tuesday with the "Big Six" tax reform negotiators: Ryan, Treasury Secretary Steven Mnuchin, White House economic adviser Gary Cohn, Senate Republican leader Mitch McConnell and the Republican chairmen of two congressional tax committees.

Lawmakers will have other issues to handle when they return from vacation next week, including raising the federal debt ceiling and avoiding a government shutdown.

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