Republicans Near Deal On Tax Cut Bill
WASHINGTON ― Even before House and Senate lawmakers held their first official meeting on Wednesday to work out differences between their tax bills, Republican tax writers were touting a tentative deal Wednesday that would likely set up final congressional passage of a compromise GOP proposal next week.
Republicans on the conference committee ― a bipartisan panel ostensibly charged with negotiating the compromise ― declined to reveal the details of their final proposal. But many seemed confident they basically had a deal.
“It feels very close,” Ways and Means Chairman Kevin Brady (R-Texas) told reporters Wednesday afternoon as he headed into the conference committee meeting.
Senators emerging from a GOP caucus lunch on Wednesday confirmed some details of the compromise ― a 21 percent corporate tax rate and a 37 percent top individual tax rate. But aides warned that some of the rates and other parts of the final bill were subject to change.
Republicans still need to ensure the legislation does not cost more than $1.5 trillion over the next decade if it is to retain the special reconciliation status that allows the Senate to pass it with a simple majority ― and keep Democrats from blocking it.
The Joint Committee on Taxation still needs to analyze the GOP deal and say how much revenue the bill will cost the government. Previous drafts of the bill have used gimmicks, such as setting individual tax cuts to expire, to limit the bill’s revenue loss. And even though Republicans spent eight years lamenting budget deficits under President Barack Obama, only one Senate Republican has insisted that the bill not add to the debt.
“The concerns I’ve had about deficit spending at a time when it’s unnecessary to do, I still have,” Sen. Bob Corker (R-Tenn.) told reporters Wednesday. Corker added that he remains undecided on whether to support the final tax bill, but that GOP leaders are working on last-minute changes in hopes of bringing him on board.
He voted against the measure that passed the Senate earlier this month on a 51-49 vote.
One major difference between the House and Senate bills is the alternative minimum tax for corporations. In the hours before they passed their bill, Senate Republicans re-inserted the tax, which they had proposed repealing and which the House bill would eliminate.
The corporate AMT is designed to prevent companies from using deductions to give themselves extremely low effective tax rates. Republicans apparently kept the corporate AMT because they needed to increase the bill’s revenue score, but it caused a problem. Since lawmakers wanted to reduce the corporate rate from 35 to 20 percent, and the current corporate AMT rate is already 20 percent, companies taking a lot of deductions would be forced to pay the AMT.
Corporate lobbyists immediately cried foul, and House Majority Leader Kevin McCarthy (R-Calif.) said the corporate AMT would need to be removed. But it’s unclear if McCarthy got his wishes. Sen. John Cornyn (R-Texas) said Wednesday that it would be “rolled back, so it affects less.”
Republican leaders were also working to address concerns raised by Sen. Marco Rubio (R-Fla.) that the tax bill will unfairly reward corporations and the wealthy over the working poor. Rubio has called for further shrinking the corporate tax rate cut to boost benefits to low-income Americans via the child tax credit. The Senate version of the bill would double the value of the credit and make people with incomes approaching $500,000 newly eligible.
Republicans have said the larger child tax credit would cover for the loss of deductions that benefit families with children. But Rubio has pushed for helping low-income families by allowing them to receive an increased cash benefit from the credit. He would not say Wednesday whether he would oppose the bill if his concerns over the child tax credit are not addressed in the final product.
“If you make $40,000, we can’t find the money to increase the child tax credit? But if you make a million a year, we can?” Rubio asked rhetorically, referring to an earlier proposal to allow millionaires to claim the credit, before walking into the office of Senate Majority Leader Mitch McConnell (R-Ky.).
President Donald Trump’s daughter, Ivanka Trump, who has teamed up with Rubio in hopes of boosting the child tax credit, was spotted entering McConnell’s office later on Wednesday.
During the conference committee meeting Wednesday, Democrats pressed for details of the supposed deal, but Republicans made clear they had no intention of including them in the behind-the-scenes negotiating. Brady told Democrats they would find out the changes they had made to the tax bill at the end of the week when Republicans release the bill to the public.
The 21 percent corporate rate would be a bit higher and the 37 percent top individual rate a bit lower than Republicans had previously proposed. The current top marginal rate for individuals is 39.6 percent, and House Republicans had preserved it to give their bill some semblance of a progressive rate structure. Experts, though, have consistently said the richest 1 percent of taxpayers would benefit most from the GOP tax plan.
Democrats suggested Republicans wanted a lower top individual rate to offset the partial loss of deductions for state and local taxes, which would primarily harm high-income taxpayers with significant local tax bills.
Conference committee member Sen. Ron Wyden (D-Ore.) called Wednesday’s hearing a sham.
“This is an obvious attempt to lend credibility to a baseless Republican talking point about following regular order,” Wyden said. “This is the ultimate betrayal of the middle class.”
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