Vice President Mike Pence pitched his party’s tax reform plan as “the largest tax cut in American history” to about 300 Michigan residents and business owners at an American Axle and Manufacturing facility in Auburn Hills Thursday afternoon.
Pence and other members of Republican leadership are underlining three major provisions: simplification of the tax code, tax cuts for the middle class and tax cuts for businesses.
There is significant pressure on President Donald Trump and the Republican Party to pass tax reform quickly. In the wake of another failed attempt at repealing Obamacare –– one of the GOP’s main promises to its base –– Republicans are eager to claim a major victory before the 2018 congressional elections.
“While health care is gonna take a little bit more time, I’m happy to tell you that help is on the way right now because, under the leadership of President Donald Trump, we’re gonna cut taxes across the board,” Pence said. “With the support of Michigan’s leaders in Congress and the support of President Trump, I say with confidence: Before we get to Christmas of this year, we’re gonna pass the largest tax cut in American history.”
The issue of tax cuts consistently plays well with Trump’s base. Diane Schindlbeck, co-chair of the Michigan Trump Republicans, said it was one of the issues most important to her.
“That is actually one of the first reasons why I actually got on board with Trump was because of what’s going on with our taxes,” she said. “As Pence said today, the simplicity of it –– it is very, very confusing and we do need to be able to put money back into the working man’s pocket. It is so hard for small businesses right now because of the high taxes that they have to pay.”
Pence implored the audience to also put pressure on the state’s Democratic lawmakers, saying he was “counting on Michigan to support this and get this across the line.”
“President Trump said yesterday tax reform has historically not been a partisan issue. It doesn’t have to be a partisan issue today,” he said. “Call both your senators –– especially Debbie Stabenow: Tell her Michigan needs a tax cut, and Michigan needs it now.”
And while Stabenow has indicated she supports bipartisan tax reform, she said she has concerns with the plan proposed by Republicans.
“Our tax code shouldn’t be so complicated that you need to buy a computer program or hire an accountant to file your taxes. I support reform that simplifies our tax code, puts more money back into the pockets of hardworking families, helps small businesses, and spurs job creation in Michigan,” she said in a statement. “I am concerned that today’s proposal would give most of the benefits to those at the top and would take away important tax incentives for Michigan manufacturers. As we work on reform in the coming months, the bottom line for me is that any reform must be bipartisan, help Michigan families and create Michigan jobs.”
Though there are many details that have yet to be worked out, Republicans released a general framework for the plan Wednesday. Ahead of Pence’s remarks, Gov. Rick Snyder stressed “it is time for reform.”
“If you want to add taxes then there are three words you should always look for: Is it simple, is it fair, is it efficient?” he asked. “If you look at the current internal revenue help, it’s confusing, it’s complex, it’s inefficient.”
Snyder said the location of the event was symbolic of the power of American manufacturing.
“It’s outstanding –– this company has been around only 20-some years and is an illustration of what we can make right here in Michigan, what we can make right here in America, and we should be proud,” he said.
American Axle, however, has a history of outsourcing their workforce. In 2008, the day after workers accepted wage and benefit reductions at the end of an 87-day strike, the company announced it was downsizing –– shrinking their workforce of 3,650 employees by almost 2,000. And in 2009, the company chose to shift much of their manufacturing operations to Mexico, costing 500 jobs in Detroit.
Discussing the effects of the plan, Pence said it would get rid of loopholes “that benefit the wealthy and the well-connected at the expense of working families.”
“Tax cuts mean more jobs,” he said. “Tax cuts mean higher wages. And tax cuts mean more money in your pockets.”
Though he didn’t refer to any specific loopholes, the recently-released framework makes it clear the wealthy would benefit greatly. One of the most major provisions in the proposal is the consolidation of the tax rate structure from seven brackets to three, at rates of 12, 25 and 35 percent. It isn’t clear what income levels those brackets would cover. The highest rate under the current structure is 39.6 percent, which only applies to married couples making at least $470,700, or individuals making at least $418,400 –– meaning those at the top would receive a tax cut of almost 5 percent.
Another highly-touted aspect of the proposal is the repeal of the estate tax –– or, as Pence refered to it, the death tax.
“We will end the American tax on death,” Pence said.
The estate tax is a tax on the value of estates handed down in wills, which only affects the very wealthy. Only estates worth over $5.5 million for individuals or $11 million for married couples require estate tax filings, and after deductions and tax credits, only about half of those pay any tax –– translating to 0.2 percent of all estates in the country.
While she acknowledged there was significant need among the middle class, Schindlbeck said she di dn’t think the benefits to the wealthy under the proposal were a bad thing.
“Why punish the people who are successful? That’s how I feel. I mean, amen. If they’re successful, I feel, let them be successful,” she said. “I think what’s fair for me is fair for you. That’s how I look at it –– I think seeing something where it’s more straight across the board Is what is more fair. The gentleman who owns this corporation –– good for him. If he’s knowing how to run a business, and he knows how to create jobs and a good product, why punish him for making a good living? Let him flourish. Go for it.”