Trump’s plan is slash business taxes, raise burden on families, individuals
By Josh Boak
AP Economics Writer
WORMLEYSBURG, Pennsylvania (AP) — The idea of cutting taxes for corporations is something Americans have long felt was a bad idea.
That’s what they’ve told pollsters, anyway. Yet President Donald Trump and his allies are betting that many voters just need someone to explain to them how a corporate tax cut would unleash an economic bonanza, with new jobs, faster growth and ample pay raises. And they’re taking that message right to some voters’ doorsteps in hopes of igniting a surge of support.
So on an unseasonably hot Saturday recently, a chipper Ashley Klingensmith canvassed a neighborhood of stately colonial homes outside Harrisburg, Pennsylvania. Using an iPad, she rang the doorbells of people presumed to be sympathetic to the notion of revamping the federal tax code. And indeed, all but one of the nine she and a colleague interviewed agreed that corporate taxes should be lowered as Trump and Republican leaders have proposed in hopes of further strengthening the job market.
Yet not everyone saw it as an urgent problem that a president who is facing tough problems involving North Korea, Iran, Afghanistan, trade deals and natural disasters must solve this year.
“He has so much on his plate that it’s going to be hard to get the Congress to focus on that, what with how many thousands of pages of the IRS tax code that’s out there, that need to be redone,” said Leora Kirkpatrick, a retiree.
At some other homes, Klingensmith encountered people prepared to blame Republicans in Congress — rather than the president — if a tax overhaul failed, whether or not it included a corporate tax cut.
“We’ve got a Congress that doesn’t do anything,” said Harold DeGarmo, who retired after working for the Army for 40 years. “I think (Trump) is doing good, trying to. The Republicans are fighting him.”
The canvassing was part of a 35-state operation spearheaded by Americans for Prosperity, a group backed by the billionaire Koch brothers’ network and where Klingensmith, 31, works as Pennsylvania field director. There are also phone bank operations and TV ad campaigns run by outside groups that have met with White House officials as part of the push. The outreach is expected to continue in coming months in hopes of helping drive the plan through Congress.
The operation is meant to remedy a perceived flaw in Trump’s failed drive to repeal President Barack Obama’s 2010 health insurance law. That effort lacked a base of voters ready to push lawmakers to back the repeal. By contrast, the outreach on taxes is aimed at loyal conservative voters who are seen as open to applying pressure to lawmakers via phone calls and meetings.
It was impossible to gauge around Harrisburg just how intense the follow-through will be by targeted voters. But the state directors of Americans for Prosperity held more than 100 meetings with federal lawmakers and staff last week.
On paper, it isn’t an easy sell. Trump’s tax plan would slash business taxes by $2.65 trillion over a decade while increasing the tax burden on families and individuals by $471 billion, according to a preliminary analysis by the nonpartisan Tax Policy Center.
The sales job amounts to a test of whether Trump’s allies can galvanize ordinary people on an issue as complex and polarizing as taxes. Among their talking points is that the tax code is a deplorable mess that favors special interests. U.S. companies, they argue, pay an inflated tax rate compared with those in other countries. So reducing the 35 percent corporate rate to 20 percent and eliminating unspecified loopholes, they say, would kick economic growth into a higher speed.
Vanessa Williamson, a fellow at the Brookings Institution who studies public attitudes toward taxes, noted that cutting corporate taxes has remained consistently unpopular with voters despite the efforts of conservative groups.
“They’ve been trying for decades at the elite levels of the Republican Party to make pro-big-business issues something that motivates their base — and I don’t think they’ve had much success,” Williamson said.
In April, the Pew Research Center found that 62 percent of Americans said they were bothered “a lot” by their belief that some corporations don’t pay their “fair share” of taxes. That perception concerned people far more than the amount of taxes they paid or the complexity of the tax code. A Washington Post-ABC News poll in September reported that 65 percent of Americans believed large companies paid too little.
Trump might be the rare politician who can bridge the gap between corporations and ordinary voters who feel let down by the political establishment. He campaigned against trade deals and illegal immigration while casting himself as a corporate success in a way that reassured voters who sought a stronger economy.
“He is somewhat uniquely positioned to make that argument because he ran and is governing as a populist,” said Rohit Kumar, a former tax counsel to Senate Majority Leader Mitch McConnell, now an executive in PwC’s tax policy services practice.
Most economists favor simplifying the corporate tax code by removing loopholes and reducing rates to make the system more efficient and transparent. But mainstream analyses say corporate tax cuts wouldn’t generate anywhere near the growth or jobs being promised by Trump.
The Treasury Department last week removed from its website an internal 2012 analysis that challenged its argument that lower corporate rates would disproportionately benefit ordinary workers. The analysis had suggested that any savings from lower corporate rates would flow mainly to wealthy investors, business owners and top executives, with a small share of the benefits going to ordinary workers.
Defying that conclusion, Treasury Secretary Steven Mnuchin has said it’s his belief — based on the studies he prefers — that lower corporate rates help primarily middle class workers, not the wealthy.
The argument that corporate tax cuts could benefit much of America might stand as good a chance of registering in the Harrisburg area as just about anywhere. The metro area lost more than 1,000 companies — roughly 8 percent of all businesses — in the past decade. The losses involved primarily businesses that employed fewer than 20, according to the Census Bureau. The area’s unemployment rate is 4.6 percent, still higher than the 3.7 percent rate when the Great Recession officially began a decade ago.
It was in one such typical neighborhood that Klingensmith, 31, wearing black leggings and running shoes, left her black SUV idling as she power-walked to each door. She joined Americans for Prosperity three years ago, having previously worked as a district staffer for Rep. Keith Rothfus, a Republican in western Pennsylvania, after graduating from law school in Pittsburgh.
As Klingensmith and a fellow volunteer knocked on about three dozen doors, they posed four questions that struck a succession of themes: That it had been three decades since the tax code was overhauled, that Americans were forced to spend too much time filling out tax forms, that loopholes existed for the “politically connected” and that the corporate tax rate had been hindering economic growth.
The questions resembled what’s known as a “push poll” — the goal is to sway opinion rather than elicit objective feedback.
“Our burdensome tax code is hindering economic growth,” Klingensmith said. “America has the highest corporate tax rate in the world, which is preventing job creation and making us less competitive. Do you think that reducing the corporate tax would make America a better place to do business and spur economic growth?”
Here’s how that question was typically answered by residents:
“Absolutely.” “Oh, yes.” “Most definitely.”
That was just what Klingensmith wanted to hear.
And she responded to them with a “Wonderful!” or an “Amen, sister.”
