STEVE INSKEEP, BYLINE: If a tax bill makes it out of Congress, it'll be the first major legislation signed by President Trump and this year's first big success for House Speaker Paul Ryan. He's run many bills through the House only to have them sink in the Senate. Senators were debating tax reform yesterday when we met with Ryan. All tax reform has winners and losers as rates and deductions change. Our question for Ryan involved who wins and who loses?
What does it say that in practice, according to independent analyses, businesses gain, people with large estates to leave to their heirs gain, high-income people gain but a lot of middle-income people do not gain.
PAUL RYAN: I disagree with that. The average tax cut for a middle-class family is going to be $1,182.
INSKEEP: Average, meaning not everybody.
RYAN: So that's where you run numbers on average taxpayers. This is designed to be a middle-class tax cut. I think the people who are concerned the most are some of the big businesses.
INSKEEP: At the same time, a lot of deductions go away, and it's not necessarily what you'd think of as a special-interest deduction. We've reported that 9 million people or so use a deduction for medical expenses, excessive medical expenses, and that deduction goes away. A lot of them are ordinary people with kids who have severe trouble.
RYAN: But it's typically a higher-income person because of the way the Obamacare tax increase worked on that. You have to make a pretty good amount of money before you can even enjoy the ability to use that tax deduction. But the whole point of this is - and the analysis is very clear - this is an average tax cut for every taxpayer on average. You can't run a number for every single 330 million people in America. But it's designed to provide tax relief across the board. The only rate we don't reduce - this is the House bill I'm talking about...
INSKEEP: Yeah.
RYAN: ...Is the top rate.
INSKEEP: Lily Batchelder of New York University took some numbers from the Joint Committee of Taxation, bipartisan part of Congress, as you know very well, and concluded that something like 100 million households in this country under the House bill and even more under the Senate bill would either get no tax cut or would get a tax increase. Does that sound right to you?
RYAN: No, it doesn't sound right, unless it's a person that's not paying taxes already. You have to remember, there are millions of people who do not pay taxes today to begin with. So if you're not paying income taxes today, it's pretty hard to cut your taxes. I think some people are cherry picking statistics. I haven't seen this analysis so it's hard for me to go into it, but...
INSKEEP: OK.
RYAN: ...Because of the Senate budget rules, there are some sunsets in the law in the later part of the decade where some of that tax relief goes away.
INSKEEP: It gets worse in later years. That's true.
RYAN: Yeah, and that's what I think maybe that could be talking about. But just as history if history is any guide, Congress has a very strong practice in history of not removing middle-class tax relief like we didn't in 2010.
INSKEEP: Yeah, but help me understand that. You made the middle-class tax cuts limited in terms of years in order to avoid damaging the deficit too badly, increasing the deficit too badly, trusting that a later Congress would fix it, which means the deficit gets worse or it doesn't get fixed. Why does that make sense?
RYAN: Well, this was because of the Senate budget rules, which obviously we're not big fans of here in the House. But I'd also attest to the fact that this is going to produce economic growth. The Tax Foundation, a nonpartisan think tank, showed that because of the tax relief in this bill and the pro-growth provisions in this bill, that will lead to about a trillion dollars in additional revenue because of faster economic growth. So our goal here is to give people relief and to grow the economy.
You get that kind of economic growth, which is clearly possible, and we think this helps us do that, then people can get wage increases.
INSKEEP: You cited a study finding that that economic growth can come from the business tax cut. We could also cite a study from the Institute for Policy Studies raising questions about that. You do know that it's possible that businesses will take their tax savings and simply give it to stockholders in the form of dividends or simply hold onto it in cash or buy back stock.
RYAN: That's still not...
INSKEEP: What if they do? Does it matter to you?
RYAN: That's still not an excuse not to put American businesses on a more level playing field with the rest of the world. Here's the dirty truth of the matter. We live in a global economy whether we like it or not. I come from Wisconsin. The biggest company publicly traded in Wisconsin, headquartered in Wisconsin, used to be Johnson Controls. Johnson Controls is now an Irish company. Their worldwide tax rate is 12.5 percent because they became an Irish company, not 35 percent. So what is happening in America is American businesses are leaving, going to other countries, building factories in other countries.
And foreign companies are buying American companies. And that's why I'd say all these arguments about why we shouldn't be doing corporate rate reductions, I think they pale in comparison to the fact that if we don't do this, we'll see more of this ugly trend continue.
INSKEEP: How do you keep corporations from just pocketing the money?
RYAN: So what we do is we have an incentive which says if you invest that money in your factories in America by expanding plant and equipment, which you inevitably hire people to run it, you can write that off 100 percent. And what we find is that is what really does help create economic growth and jobs and higher wages.
INSKEEP: Why is it OK to increase the deficit, as this tax bill will do?
RYAN: Actually, I don't think it will increase the deficit. That's my entire point. There's two things you've got to do to get the deficit. You've got to grow the economy, you've got to control spending. We need - we have far more work to do to control spending, believe you me. But if we don't pass this tax law, we will not get the kind of economic growth we can get in this country. This grows the economy.
INSKEEP: If you'll forgive me, Steven Mnuchin, the treasury secretary, has also said that this will spur so much economic growth, it'll pay for itself. It'll bring in more tax revenue.
RYAN: I think that's quite possible. I can't speak to...
INSKEEP: He said that, but the Treasury Department has been unable to produce an analysis proving that.
RYAN: Yeah, I really think we're at a global economic focal point, which is if we do not modernize our tax laws and put American businesses on a level playing field with the rest of the world, we'll lose more jobs and we will see economic damage occur as a result of it.
INSKEEP: That's one part of our video talk with House Speaker Paul Ryan at the Capitol yesterday. The whole transcript is at npr.org. NPR's Susan Davis has been listening with us. Hi, Sue.
SUSAN DAVIS, BYLINE: Hey, Steve.
INSKEEP: Didn't we just land there on the big issue in the Senate right now, how much this tax cut is going to increase the deficit?
DAVIS: Yes, absolutely. And the speaker is able to rely on more rosy projections because of the ways the two chambers function. The Senate just simply can't do the same and that's because at least two senators, Bob Corker of Tennessee and Jeff Flake of Arizona, are saying that they do believe that this tax bill will contribute to the deficit. And they're going to need more assurances included in the Senate version of the bill to make sure that it doesn't do that in order to win their vote.
INSKEEP: So what happened last night as the bill was heading seemingly toward passage and what happens now?
DAVIS: They need to figure out a way to get more revenue. And one of the options they're looking at on the table is to change the corporate tax rate. Currently, the bill takes it from 35 down to 20. They may have to consider higher corporate tax rates in order to bring in more revenue. Of course, you do that to appease one set of senators, you very likely anger a whole other set of senators and probably also the president of the United States.
INSKEEP: Because you're going for a tax cut and it becomes a tax increase or less of a tax cut, anyway.
DAVIS: Exactly.
INSKEEP: Sue, always a pleasure talking with you. Thank you very much.
DAVIS: You're welcome. Transcript provided by NPR, Copyright NPR.
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