Republicans Prepare for Final Rollout of Tax Bill
As Republicans prepared to roll out their $1.5 trillion consensus tax plan, questions continued to loom about how the last-minute changes would be paid for and whether reluctant Republicans in high-tax states would have their concerns satisfied well enough to get them on board with the bill.
Republicans plan to unveil a final bill Friday with the aim of voting on the bill early next week and delivering it to President Trump for signing before Christmas.
In an early morning cheer on Twitter, Mr. Trump encouraged Republicans to get the job done.
House and Senate Republicans agreed in principleon Wednesday to the framework of a consensus bill. Late changes included a slightly higher corporate tax rate of 21 percent, rather than the 20 percent in the legislation that passed both chambers, and a lower top individual tax rate of 37 percent for the wealthiest Americans, who currently pay 39.6 percent. But the bill will still scale back some popular tax breaks, including the state and local tax deduction and the deductibility of mortgage interest.
Breaking from the House bill, the agreement would allow taxpayers to continue to deduct high out-of-pocket medical expenses, and it would retain a provision allowing graduate students who receive tuition stipends to avoid paying taxes on that benefit. Also included is the Senate’s repeal of the Affordable Care Act requirement that most Americans have health insurance or pay a penalty and a provision that opens the Arctic National Wildlife Refuge in Alaska to energy exploration.
Still, the bill contains a host of tax changes that are expected to increase the cost of the bill that passed the Senate, such as repealing the corporate alternative minimum tax and increasing the income threshold at which the individual alternative minimum tax kicks in.
While the late changes to the tax bill were mean to alleviate concerns of skeptical Republicans, it was not clear how they would be paid for while still complying with the strict Senate budget rules that will allow the bill to pass without votes from any Democrats. Republicans can add no more than $1.5 trillion to the deficit if they are to pass the bill along party lines.
Potential so-called pay-fors that were the subject of speculation included allowing the tax cuts for individuals to expire earlier or raising the tax rate on profits that companies have parked overseas and will now be required to pay taxes on.
“We’re literally trying to squeeze about $2 trillion in tax reform into a $1.5 trillion box and that’s been a problem,” Senator Ron Johnson, a Wisconsin Republican, who held out on supporting the initial version of the Senate tax bill until it gave more generous tax breaks to “pass through” businesses.
On Thursday, Republican leaders continued to express confidence that they were getting close to passing the most sweeping tax overhaul in decades.
“I think there’s going to be strong support in the House and Senate on this or we wouldn’t be moving forward,” Representative Kevin Brady of Texas, the Republican chairman of the House Ways and Means Committee, said on CNN.
But other concerns are looming, including the health of two Republican senators, John McCain of Arizona and Thad Cochran of Mississippi, who have recently been hospitalized with health problems. Republicans can only afford to lose two senate votes, and Senator Bob Corker of Tennessee has already expressed his opposition to the bill.
Democrats have been largely sidelined in the final stages of the tax discussions.
They assailed the single public meeting of the conference committee on Wednesday as a “sham” and a “farce” and they continue to point to polls that show Republicans will likely pay for pushing tax cuts that do not appear to be popular with the general public. Democrats have also been calling on Republicans to delay the vote so that Alabama’s incoming Democratic senator, Doug Jones, has time to be seated.
“It’s the same rushed, awful process as before and it can only result in mistakes and unintended consequences that can wreak havoc on the economy,” Senator Chuck Schumer of New York, the Democratic minority leader, said on Thursday. “Every day, the more people know about the bill, the more they don’t like.”