Politico: Trump’s team and lawmakers making significant strides on tax reform plan

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President Donald Trump’s top aides and congressional leaders have made significant strides in shaping a tax overhaul, moving far beyond the six-paragraph framework pushed out in July that stoked fears about their ability to deliver on one of the GOP’s top priorities.

There is broad consensus, according to five sources familiar with the behind-the-scenes talks, on some of the best ways to pay for cutting both the individual and corporate tax rates.

The options include capping the mortgage interest deduction for homeowners; scrapping people's ability to deduct state and local taxes; and eliminating businesses' ability to deduct interest, while also phasing in so-called full expensing for small businesses that allows them to immediately deduct investments like new equipment or facilities.

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So far, the tax reform process has been led by Cohn, Mnuchin, McConnell, House Speaker Paul Ryan, Senate Finance Chair Orrin Hatch, and Ways & Means Committee Chair Kevin Brady — a group that has nicknamed itself the “Big 6” and is eager to project a united front on policy and political questions.

Republicans want the fall to be all about taxes, if they can help it. It seems like their best and perhaps only route toward a major legislative victory before the fever of the 2018 midterm elections takes hold.

“People are feeling optimistic because they do not see failure as an option. They’ve put all of their eggs in one basket now, and that basket is tax reform,” said one source familiar with the administration’s tax talks. “The fear of failure on this will cause people to agree with things they may not normally agree to.”

The White House is even creating a mini-war room inside its existing communications shop to pay special attention to taxes, led by newly installed communications director Hope Hicks, according to a White House official. She will be joined by Tony Sayegh, assistant secretary for public affairs at Treasury, who will be temporarily detailed to the White House to help Hicks and others build public support for the tax overhaul. Another White House official said that the president will make a major tax announcement imminently.

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Decisions still being hammered out are whether a hypothetical tax bill adds to the deficit over a 10-year period — a key factor in passing legislation through the budget process known as reconciliation, which requires fewer party-line votes than normal legislation.

Top White House officials are less concerned about adding to the deficit because many believe that the economic growth stemming from lower tax rates will make up any budget shortfalls.

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