“GOP” Tax Reform Update 

Axios is out today with a report summarizing the current state of “GOP” tax reform progress. It confirms the following highlighted in an April post on tax reform: 

  1. “GOP” tax reform is being driven by Trump democrats Cohn and Mnuchin 
  2. Tax reform is much farther along than the “back of the napkin” approach the MSM espoused in April 
  3. “GOP” tax reform is highly likely to box in the Democrat Party…because it’s being driven by democrats 
  4. The definition of “rich” is highly likely to move upward in a material fashion 

Points 1-3 are obvious. Point 4 is where it gets interesting, because by simultaneously shrinking the number of brackets and raising the top bracket, net-net a tax reform bill can box in the Democrats from a “soak the rich” standpoint AND fund a large-scale middle class tax cut that leaves the “rich” taking only a minor all-in hit (i.e. an individual earning $1.5 million breaks even on a 10% cut on the first $500k and a 5% hike on the next $1 million). 

According to the Axios report, Bannon supports a “4 handle” for the top tax bracket of $418,400. While I think this bracket should move up, IMO his proposal highlights the dynamic outlined above. 

“Big league” tax reform is coming. 

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