Se­nate Repub­li­cans face key tax over­haul de­ci­sions


WASH­ING­TON — Se­nate Repub­li­cans have not yet come to a con­sen­sus on sev­eral cru­cial de­ci­sions that must be made be­fore any se­ri­ous work be­gins on leg­is­la­tion to over­haul the U.S. tax code.

Com­pli­cat­ing that ef­fort are a num­ber of press­ing dead­lines the cham­ber faces, in­clud­ing fund­ing the gov­ern­ment past the end of Septem­ber, the up­com­ing debt ceil­ing, and a pend­ing reau­tho­riza­tion of a pop­u­lar chil­dren’s health in­sur­ance pro­gram.

In the af­ter­math of the failed at­tempt to re­peal and re­place the 2010 health care law, law­mak­ers are now turn­ing their at­ten­tion to the next big-ticket item on the agenda — a tax over­haul. Con­gres­sional GOP lead­ers — in­clud­ing House Speaker Paul D. Ryan and Se­nate Ma­jor­ity Leader Mitch Mc­Connell — have been work­ing in pri­vate with the White House on a blue­print for the pend­ing leg­is­la­tion, though de­tails from those hud­dles have been sparse.

While ad­min­is­tra­tion of­fi­cials are aim­ing to have work done on the tax over­haul in the next few months, lingering ques­tions over the ba­sic pa­ram­e­ters for the ef­fort put that time­line in se­ri­ous jeop­ardy.

Repub­li­cans, for ex­am­ple, are still de­bat­ing whether the bill must re­main deficit­neu­tral.

“That’s got to be front and cen­ter within the con­fer­ence, be­cause there’s ob­vi­ously dif­fer­ing opin­ions on it,” Sen. Shel­ley Moore Capito of West Vir­ginia said last week. “We’re just getting started.”

One pro­posal un­der dis­cus­sion, ac­cord­ing to mul­ti­ple GOP law­mak­ers, is us­ing the money banked from a po­ten­tial repa­tri­a­tion tax — a one-time tax on U.S. busi­nesses who bring back off­shore earn­ings — to fund an in­fra­struc­ture pack­age, an idea that for­mer Pres­i­dent Barack Obama ad­vo­cated and some Re­pub­li­can mem­bers have en­dorsed in the past.

“The only rea­son to do that is if you have a bi­par­ti­san op­por­tu­nity,” said Sen. Tim Scott of South Carolina, a mem­ber of the cham­ber’s Fi­nance Com­mit­tee that has ju­ris­dic­tion over tax is­sues. “It’s prob­a­bly on the be­gin­ning end of the dis­cus­sion.”

While it is still un­der de­bate, mov­ing for­ward with such a pro­posal would mean the bill would al­most cer­tainly add to the deficit, which could elicit push­back from some in the Se­nate GOP con­fer­ence who had hoped to use the repa­tri­a­tion tax to help fund tax cuts.

Ken­tucky Sen. Rand Paul said the de­bate gets to the heart of what the Re­pub­li­can Party stands for — whether to ad­vance leg­is­la­tion to cut taxes or a mea­sure that he re­ferred to as a “tax-shift­ing” bill that would “move the taxes around but the over­all ef­fect on the econ­omy is zero.”

“I think it pits the estab­lish­ment, which re­ally is for rev­enue-neu­tral, against the con­ser­va­tives that would rather see a tax cut,” he said.

“I frankly don’t think you have to pay for tax cuts. We should just put for­ward a bill that cuts taxes and then take some of the rev­enue that comes in from repa­tri­a­tion and I would pro­gram it to­wards roads and bridges,” Paul said. “But you can’t do that and also in­sist that the bill be rev­enue-neu­tral.”

Mc­Connell, in an in­ter­view with Bloomberg News in May, said a tax over­haul shouldn’t add to the bud­get deficit.

“It will have to be rev­enue-neu­tral,” the Ken­tucky Re­pub­li­can said. “We have a $21 tril­lion debt.”

Se­nate Repub­li­cans also face ques­tions over how to an­a­lyze the bud­getary im­pact of the bill. There is grow­ing con­sen­sus within the GOP con­fer­ence, ac­cord­ing to sev­eral se­na­tors, to use a process that would take into ac­count the macroe­co­nomic re­ac­tion to the new pol­icy, a method known as dynamic scor­ing.

Mc­Connell, be­fore the Se­nate left for its 32-day re­cess, reaf­firmed the Re­pub­li­can strat­egy to use a fast-track bud­get pro­ce­dure known as rec­on­cil­i­a­tion that would re­quire only a sim­ple ma­jor­ity in the Se­nate to ad­vance a tax over­haul — the same process used for the failed health care ef­fort. But un­like the at­tempt to re­vamp the U.S. health in­sur­ance sys­tem, the tax leg­is­la­tion will move through the stan­dard com­mit­tee process.

The White House con­tin­ues to make a push for the Se­nate to con­tinue work on the health care mea­sure but Re­pub­li­can se­na­tors have al­ready be­gun to pivot to the tax over­haul.

“We must en­sure com­pre­hen­sive tax re­form in­cludes spe­cific and mean­ing­ful tax relief for par­ents,” Sen. Marco Ru­bio of Florida wrote in an op-ed last week for the far-right Bre­it­bart News. “The up­com­ing de­bate about tax re­form should be grounded in the re­al­i­ties they face ev­ery day: a fixed bud­get, stretched pay­checks, and tough choices about putting food on the ta­ble and par­tic­i­pat­ing in kids’ sports leagues.”

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