Exclusive: Trump, GOP to cut top rate to 35 percent - Axios
Top Stories
Featured

Exclusive: Trump, GOP to cut top rate to 35 percent

President Trump and Republican leaders plan to cut the top tax rate for the wealthiest Americans to 35 percent and dramatically reduce taxes on big and small businesses, according to details leaked to Axios.

Why it matters: It's the first glimpse of the tax reform plan agreed upon in secret between the "Big Six" congressional leaders and administration officials. It forms the starting point of the tax reform process, which will play out over the coming months.

The big change: The GOP leaders and the White House plan to cut the top tax rate for “pass through" businesses from 39.6 percent to 25 percent. (Most businesses in America do not pay the corporate tax. Sole proprietors and other mostly smaller businesses see their profits “passed through” to their owners and taxed at the individual income rate.)

The so-called "Big Six" tax framework — named because it's been hashed out behind closed doors between six top Republicans and administration officials — will set up a clash with Democrats over the tax breaks that apply to large corporations and upper income Americans.

  • Most Democrats have already drawn a red line on tax reform: 45 out of 48 Democratic senators signed a letter saying they wouldn't support any tax bill that adds to the deficit or offers new tax breaks to the wealthiest Americans.
  • But Republicans are desperate for a win and appear on course to fund tax cuts with a blend of deficit spending and the closing of loopholes. They will dare Democrats, especially the 10 senators up for re-election in states Trump won, to vote against tax breaks for their constituents.

What's next: President Trump is planning to give a speech unveiling the Big Six framework in Indiana on Wednesday, three sources said. The framework is the starting point for the tax reform process. It reflects the shared view of the Big Six, but it will inevitably change substantially as it goes through the normal legislative processes in the House and Senate.

(The "Big Six" are House Speaker Paul Ryan, Senate Majority Leader Mitch McConnell, Treasury secretary Steven Mnuchin, White House economic adviser Gary Cohn, and the chairmen of the two tax-writing committees — Senate Finance Committee chairman Orrin Hatch and House Ways and Means chairman Kevin Brady.)

The details, per three sources with knowledge of the plan:

  • Top individual tax rate cut from 39.6 to 35. The current seven income tax brackets collapsed to three, as part of simplification. (Axios hasn't obtained the other two rates.)
  • Axios can confirm that the Big Six agreed to cut the corporate tax rate from 35 percent to 20 percent. That key detail leaked last night to the Washington Post. (Trump has said he wants the corporate rate to be 15 percent.)
  • The Big Six framework is also expected to include guardrails to prevent wealthy people from artificially lowering their income taxes by rearranging their affairs to get taxed at the small business rate.
  • We can confirm, too, WashPo's reporting that Republicans plan to double the standard deduction — a boost for the middle class and a key component of simplification.

These Big Six decisions have been held incredibly tightly, but details began leaking out around Capitol Hill on Friday night and the corporate rate was first published by the Washington Post's Hill team. By Saturday, influential figures on K Street were beginning to learn more details.

Some problems the Big Six could run into:

  • The National Federation of Independent Business (NFIB,) the leading small business association, wants to equalize the small business rate and the corporate rate. Under the current plan, that's not happening. The corporate rate will be 20 percent and the small business rate 25 percent. "That's going to be controversial, but it's not a deal-breaker I don't think," said a source close to the process.
  • House conservatives — especially the Freedom Caucus — haven't been involved in the Big Six discussions and they want the corporate rate to be much lower, at 16 percent. Republican leaders say there's no way that's going to happen, and Treasury Secretary Mnuchin agrees.
  • The Trump tax plan will likely add to deficits, at least in the short term, which will bother some deficit hawks. But tax reform advocates were heartened when, just this week, Senate Republicans on the Budget Committee cut a deal that would reduce government revenue by as much as $1.5 trillion over 10 years. Republicans argue that, with economic growth spurred by the tax reform, there'll be substantially less lost revenue than $1.5 trillion.
  • Realtors and home builders won't be happy with the doubling of the standard deduction. That's because lots more people will take the standard deduction and many fewer will itemize their tax returns. A prevailing belief in the real estate world is that under those conditions, fewer people will take the mortgage interest deduction, which could mean fewer homes being purchased.
  • Whichever groups are hit up for the "pay-fors" — the loopholes being closed — will inevitably form lobby groups and oppose those elements of the plan.

Featured

Pope vs. Fake News

Pope Francis. Photo: Franco Origlia / Getty Images

Pope Francis warned journalists about committing the "very serious sin" of sensationalizing the news and providing one-sided reports, per AP:

"You shouldn't fall into the 'sins of communication:' disinformation, or giving just one side, calumny that is sensationalized, or defamation, looking for things that are old news and have been dealt with and bringing them to light today."

Why it matters: The Pope is planning to dedicate his annual communications message to "fake news," the AP reports. This is one of several instances of Trump's "fake news" message making its impact around the globe.

Featured

North Korea sanctions are keeping food, medicine from citizens

Pyongyang citizens gathering to mourn in front of a portrait of late North Korean leader Kim Jong-il at the Pyongyang Gymnasium. Photo: KCNA / AFP / Getty Images

Sanctions against North Korea could increase cases of acute malnutrition among children, and hamper humanitarian efforts, according to a Washington Post report.

Why it matters: While sanctions were enforced with the intent of punishing the regime for its nuclear threats and missile launches, an American neurosurgeon who operates in North Korea, Kee Park, told the Post "they're hurting the wrong people."

  • The U.K. announced last month it would cut off aid to North Korea.
  • South Korea hasn't "delivered on its September pledge to give $8 million to the World Food Program and UNICEF for children and pregnant women," the Post reports.
  • The U.N. resident coordinator in Pyongyang, Tapan Mishra, wrote to U.N. officials that "crucial relief items, including medical equipment and drugs, have been held up for months...they are not on the list of sanctions items."
  • A humanitarian worker in Pyongyang told the Post said Chinese suppliers "have decided that it's not worth the exposure or the risk of their reputations" to continue sending supplies, despite not sending anything already banned by sanctions.
Featured

Inside the Pentagon's multi-million dollar program to explore UFOs

An aerial view of the Pentagon building in Washington, D.C. Photo: AFP staff / Getty Images

The Pentagon has officially confirmed the existence of its $22 million program to investigate unidentified flying objects (UFOs), reported by Politico and the New York Times almost simultaneously today.

Why it matters, per Politico's Bryan Bender: "The revelation of the program could give a credibility boost to UFO theorists, who have long pointed to public accounts by military pilots and others describing phenomena that defy obvious explanation, and could fuel demands for increased transparency about the scope and findings of the Pentagon effort, which focused some of its inquiries into subjects such as next-generation propulsion systems."

The details of the Advanced Aviation Threat Identification Program:

  • Harry Reid, the former Democratic Senate Majority Leader requested the program's funding in 2007. Much of it came from Robert Bigelow, the billionaire behind an aerospace program who currently works with NASA.
  • Bigelow said on CBS last May that he was "absolutely convinced" that UFOs have visited Earth and that aliens exist.
  • Pilots and various military personnel have claimed to see UFOs that "maneuvered so unusually and so fast that they seemed to defy the laws of physics."
  • One UFO sighting collected by the program is documented in "footage from a Navy F/A-18 Super Hornet showing an aircraft surrounded by some kind of glowing aura traveling at high speed and rotating as it moves," per NYT.

The program's funding ended in 2012, though some of the program's backers say it continues to operate. A Pentagon spokesman, Thomas Crosson, told NYT: “It was determined that there were other, higher priority issues that merited funding, and it was in the best interest of the DoD to make a change."

Why now: Luis Elizondo, a military intelligence officer who helped run AATIP, resigned in October because he said there wasn't sufficient time and effort put into the UFO investigation, according to his resignation letter to Defense Secretary James Mattis.

Featured

The crackdown on college fraternities

The Sigma Alpha Epsilon fraternity house at Ohio State University. Photo: Dake Kang / AP

"[A]mid worries about endemic binge drinking, sexual assault and a startling spate of deaths, schools are going beyond the old practice of shutting down individual [fraternity] houses to imposing broad restrictions on all Greek life," the N.Y. Times' Anemona Hartocollis reports atop column 1:

  • "Activities like fraternity parties and initiations have been suspended or curtailed at colleges including Ball State, Indiana University, Ohio State and the University of Michigan, as well as at least five where deaths have occurred this year: Florida State, Louisiana State, Penn State, Texas State and Iowa."
  • Why it matters ... Tracy Maxwell, founder of HazingPrevention.org: "There is definitely this moment in time where society is not willing to accept behavior that in the past has been acceptable."

Go deeper: The state of college Greek life.

Featured

Americans loathe Washington, but like home

Photo: Alex Wong / Getty Images

Americans are pessimistic about Washington and think the country is on the wrong track (69%), but are optimistic about their local communities.

That's the encouraging finding of an AP-NORC (University of Chicago) poll:

  • 9% think the country has become more united under Trump, while 67% think the country is more divided. (44% of Americans said in a poll last year that Obama's presidency had further divided the country.)
  • Even Republicans think Trump has divided America more than uniting it, 41% to 17%.
  • But, but, but ... "[P]essimism about the president and national politics doesn't extend to local communities. ... [A]bout half of Americans said they feel optimistic about their local communities" — 55% of Ds and 50% of Rs.
Featured

Mexico grants military more power in fighting drug war

Soldiers from the Mexican Army and Mexican Marines patrol along Acapulco's coastline. Photo: AFP photo/ Francisco Robles/Getty Images

The Mexican military will be granted more control in the fight against the country's drug war, which has increasingly become more violent under President Enrique Peña Nieto, after a law passed in Mexico's Congress yesterday.

Why it matters: Critics of the law — including United Nations officials and human rights groups — argue that it would "will vastly expand military authority without checks and balances and offers no exit strategy to cede eventual leadership of the campaign to combat drugs to an effective police force," per NYT.

Why now: Violence from Mexican drug cartles has gotten worse under President Peña Nieto's tenure — NYT notes that 2017 has been "the deadliest in two decades." And since troops were first sent to combat the drug gangs in 2006, "more than 200,000 people have been killed in the drug war and 31,000 people have gone missing," according to official statistics cited by NYT.

The changes:

  • Mexico has maintained civilian control over their army for nearly the past 100 years, which has ultimately given local law enforcement officers complete jurisdiction over their areas. This law would give the government and the military more control.
  • The Mexican military currently operates in 27 of 32 states around the country — they were only in six states when Peña Nieto became president five years ago.
  • Peña Nieto would have to issue a public executive order detailing his reasons for sending in more troops to different areas. That EO would last a year.
  • The military will have more authority to carry out investigations on their own terms, thus breaking from the civilian control under which they've previously operated.
Featured

White House paper suggests solar tariff support

Workers seen by solar panels of the Isyangulovo solar power plant in Zianchurinsky District, the Republic of Bashkortostan. Vadim Braidov/TASS Photo: Vadim Braidov\TASS via Getty Images

A White House document circulating within the Trump administration lays out a case for imposing new trade restrictions on imports of solar panel equipment from Asia, according to a report in Politico.

Why it matters: It's the latest sign that President Trump's hawkish trade stance toward China will soon lead to tariffs that U.S. solar energy developers fear will sharply drive up costs and curtail new project development.

The U.S. International Trade Commission (ITC) concluded in September that low-cost imports — many of which come from Chinese owned companies operating in Asia — were a cause of "serious injury" to domestic panel manufacturers.

The finding came in response to a petition from two financially distressed manufacturing companies, Suniva and SolarWorld.

What's next: The White House is slated to make a decision as soon as next month on whether to impose tariffs or perhaps some other forms of solar trade restrictions.

In November the ITC recommended tariffs that are less aggressive than what the petitioners sought. But the White House has wide latitude to decide what form of penalties, if any, to impose.

Featured

How Affordable Care Act cutbacks will hurt minority communities

Two Florida resents shop for insurance at a local center offering Obamacare enrollment. Photo: Joe Raedle/Getty Images

The Trump administration cut the Affordable Care Act federal insurance enrollment period in half (to 45 days), which has people scrambling to get insurance before time's up. But the administration's cutbacks to the program overall could have a disproportionate effect on minority communities, per NYT.

Why it matters: The Affordable Care Act has reduced the disparities in coverage across minority groups, even as African Americans and Hispanics throughout the country remain more likely than whites to be uninsured.

By the numbers:

  • 16% of Hispanics overall remain uninsured, down from 24.4% in 2013.
  • 10.5% of African Americans overall remain uninsured, down from 15.9% in 2013.
  • Among Hispanics ages 18-64, the uninsured rate is 17.9 percentage points higher than whites of the same age. In 2013, the difference was 26 percentage points.
  • Among African Americans ages 18-64, the uninsured rate is 4.6 percentage points higher than whites of the same age. In 2013, the gap was 10.4 percentage points.

One example of how the administrations cuts is already affecting minority communities, detailed by NYT, is at the Center for Family Services in New Jersey. The nonprofit center assists local residents across seven counties. After its federal funding was cut by 64%, the staff of 21 members who collectively spoke six different languages has been reduced to a staff of six that only speaks English and Spanish.

With a reduced enrollment period and a smaller staff, it's difficult for nonprofit groups like this to serve residents who need help signing up for insurance. “We're still getting out there and doing events," Pamela Gray, a navigator with the group, told NYT, “but the less people, the less people you're able to serve."

Featured

Trump had fewer deportations than Obama's first year

Despite President Trump's tough-on-immigration rhetoric, there were around 177,000 fewer deportations this year than in 2009, Obama's first year in office. That number is lower than any year during Obama's presidency, according to Immigration and Customs Enforcement (ICE) data.

Data: Immigration and Customs Enforcement via FOIA office; Chart: Andrew WItherspoon / Axios

One big thing: The numbers didn't really start to decline for Obama until after he signed DACA in 2012. It protects illegal immigrants from deportation if they came here as children, but in September, Attorney General Jeff Sessions announced the end of the program.

Why it matters: Sessions gave Congress six months to figure out what to do about the Dreamers, and if nothing is done, the removal of DACA's protections could lead to an uptick in deportations.

Don't forget:

  • Since the very beginning, Trump has campaigned on a border wall, more deportation officers and tougher immigration policies.
  • In February, then-DHS Secretary John Kelly signed two memos, which allowed ICE officers to arrest anyone they suspected of violating immigration laws, among other things. The memos caused a panic, and there were several stories published about ICE roundups and immigrations raids.

Trump vs. Obama: ICE officers in Texas feel a "night and day" difference in their work between Trump's and Obama's presidency, Texas Attorney General Ken Paxton told Axios in October. He said that during the Obama administration "they were basically told not to do their job."

By the numbers:

  • Trump's highest deportation month had only about half the number of deportations as Obama's highest month.
  • In 2008, there were more than twice as many non-criminal deportations as criminal deportations. The ratio in 2016 was 0.71 — the third-lowest ratio, following 2015 and 2013.
  • Unauthorized border crossing attempts have also dropped by almost 150,000, according to Customs and Border Protection data. This could partially contribute to the declining deportation numbers, as a number of arrests and deportations occur at the border.
  • While deportations are down, there was a 25% increase in ICE arrests, the Washington Post reported.
Editor's note: This post has been updated to reflect that 2009 was Obama's first year in office, not 2008.
Featured

Trump admin bans CDC from using certain words like "fetus"

Outside the CDC headquarters in Washington, D.C. Photo: Photo by James Leynse / Corbis via Getty Images

Policy analysts at the Centers for Disease Control and Prevention were told by the Trump administration on Thursday that they are not allowed to use the words like "science-based," "evidence-based" and "transgender," in their budget documents, according to a CDC analyst who spoke to The Washington Post.

Why it matters: The administration wants to control what it considers controversial wording from agencies as they submit documents for the president's budget for 2019, expected to be released in February. However, the analyst told the WashPost they "could not recall a previous time when words were banned from budget documents" due to ideology.

The details, per The Washington Post:

  • The list of banned words: vulnerable, entitlement, diversity, transgender, fetus, evidence-based and science-based.
  • The meeting about the banned words was led by Alison Kelly, a senior leader in the agency’s Office of Financial Services, who told the CDC officials she was just the messenger.
  • The CDC has offices that directly work with public health issues that relate to those words, such as its research on fetus development for the Zika virus and preventing HIV among transgender people.

Other CDC officials confirmed the existence of a list of forbidden words, the article said, although spokespeople from CDC or OMB did not comment by their deadline.