Northwest Arkansas Democrat-Gazette
GOP rounds up tax-plan votes
Threshold reached, McConnell says as holdouts won over
WASHINGTON — Senate Republicans locked down the votes Friday for a $1.5 trillion tax bill that bestows benefits on corporate America and high earners while delivering mixed blessings to everybody else.
The legislation was headed for passage later in the day on the Senate floor, after a few final rounds of deal-making
brought key wavering senators on board.
“We have the votes,” Majority Leader Mitch McConnell, R-Ky., told reporters after emerging from a meeting with his caucus.
Almost simultaneously, Sen. Jeff Flake, R-Ariz., a prominent holdout, announced his support for the legislation. That followed a similar announcement earlier in the day from Sen. Ron Johnson, R-Wis., and several hours later, Sen. Susan Collins, R-Maine, also moved from undecided to “yes.”
A single GOP holdout remained: Sen. Bob Corker, R-Tenn., who had failed in his fight to add a deficit-containment mechanism to the legislation.
Late Friday afternoon, Corker announced that he would be voting “no,” but by then it no longer mattered. Fifty-one out of 52 Senate Republicans were in the “yes,” column, setting up a key victory for McConnell and President Donald Trump on the legislation that has emerged as their No. 1 goal after their failure earlier in the year to repeal the Patient Protection
and Affordable Care Act.
The centerpiece of the GOP plan is a move to lower the corporate tax rate from 35 percent to 20 percent, starting in 2019. The Senate tax bill also would temporarily cut tax rates for families and individuals, until 2025.
But the bill would kill a number of tax benefits. And it would subject fewer people to the estate tax but stop short of eliminating that tax altogether.
Democrats warned Friday that Republicans were making a political mistake with a bill that would increase taxes on some middle-class families.
“It’ll be a dramatic turning point in a downward spiral for the Republicans,” said Sen. Charles Schumer of New York, the Democratic leader.
Democrats also took to the Senate floor and social media to mock what they said was a 479-page, amended version of the bill that included changes in barely legible handwriting.
The most recent review of the bill by the Joint Committee on Taxation, Congress’ nonpartisan tax analysts, found that only 44 percent of taxpayers would see their burden reduced by more than $ 500 in 2019 but that high earners would fare much better than the poor under the bill.
The bill also would repeal the individual mandate from the Affordable Care Act, a change that was added in recent weeks as part of a broader GOP effort to dismantle the law enacted during President Barack Obama’s tenure. The individual mandate creates penalties for many Americans who don’t have health insurance, but the repeal would leave 13 million more people uninsured.
And, the bill would explicitly let parents buy tax-advantaged 529 college savings accounts for fetuses, a step they can already take but which anti-abortion forces hailed as a victory by inscribing that right into law.
The tax package still must clear several hurdles before it can become law. Once the Senate passes the bill, GOP leaders must reconcile differences between the Senate bill and a version that passed the House several weeks ago. They are optimistic they can do this, but a number of issues must be resolved before they can send the bill to the president’s desk. And there will be major implications for the taxes paid by families and individuals based on how those discussions go.
For Trump, passage of the tax plan would mark a welcome triumph, especially as the White House is beset by troubles on other fronts. While the Senate neared a vote on the tax plan, former national security adviser Michael Flynn pleaded guilty to lying to the FBI about his contacts with the Russian ambassador.
Securing the final few Senate votes forced GOP leaders to add more than $250 billion in tax cuts for individuals and businesses to their plan. To offset some of these costs, they had to abandon efforts to fully repeal the alternative minimum tax for individuals and companies, according to a brief summary of the changes that was shared with GOP members. Instead of fully repealing the alternative minimum tax, they will now try to scale it back.
The alternative minimum tax was put in place in the 1980s as a way to prevent wealthier Americans from using deductions to avoid paying taxes.
EQUIPMENT, IMMIGRANTS
Flake announced his “yes” vote after he said he had secured leadership backing for two priorities: one related to how businesses can deduct big investments like equipment purchases and the second involving a solution for immigrants brought illegally to the United States as children.
“Having secured both of those objectives, I am pleased to announce I will vote in support of the tax reform bill,” Flake said in a statement.
Flake said his deficit concerns were allayed by a new approach to the bill’s expensing deduction, which allows businesses to write off the full cost of investments in equipment and facilities. The change calls for gradually phasing out the break after five years instead of abruptly canceling it. That adds $34 billion to the cost of the bill, but Flake said it would save money in the longer term by making lawmakers less likely to extend the break in the face of pressure from business interests.
Flake also said the administration and Senate leaders had agreed to work with him toward a resolution for children brought illegally into the country. These immigrants were granted temporary protections under Obama’s Deferred Action for Childhood Arrivals program that Trump has announced he will revoke in March.
Flake is a longtime proponent of overhauling immigration laws and wants permanent protections for the deferred-action program participants. He said he had spoken with Vice President Mike Pence about the issue.
“We had a long conversation last night and today, and he committed to start working with me on this,” Flake said.
Johnson came on board after leadership sweetened the deal for certain businesses whose owners pay taxes through the individual code rather than at corporate rates. Johnson retains partial ownership in one such “passthrough” business, and the issue has been a key concern.
Senate GOP leaders had proposed allowing passthrough owners to deduct 17.4 percent of their income from their taxes and then pay taxes on the remaining income. Johnson and Sen. Steve Daines, R-Mont., argued for days that this was not generous enough for these businesses, and GOP leaders eventually raised the deduction level to 20 percent, which added roughly $60 billion to the size of the tax cut.
But Johnson continued holding out, and on Friday he said the deduction had been raised to 23 percent, securing his support.
“After weeks of fighting for Main Street businesses including Montana’s farmers and ranchers, I’ve decided to support the Senate tax cut bill, which provides significant tax relief for Main Street businesses,” Daines said in a statement.
Collins said the leadership had promised her the bill would protect certain deductions individuals use to lower their tax bills, including on matters related to medical expenses and tax payments to state and local governments. Collins also said the leadership had agreed to support passing two bipartisan bills to help stabilize the health insurance system set up under the Affordable Care Act.
Senate leaders had little margin for error, since they can lose only three GOP votes and still prevail in the closely divided chamber. Democrats are unanimously opposed to the bill, and took turns Friday delivering scorching floor speeches slamming it as a giveaway to the rich.
Friday’s progress was a turnaround for Republicans after the bill hit snags Thursday. An unfavorable economic analysis had inflamed Corker, who was demanding assurances that the bill not add to the deficit. Corker wanted a “trigger” added to the bill to kick in and raise rates if growth projections weren’t met, but the Senate parliamentarian ruled his plan unworkable under the complex rules governing the legislation.
The result was a tense standoff Thursday evening as Johnson, Flake and Corker threatened a last-minute objection to stop the tax bill from passing. This forced GOP leaders to scramble to try to accommodate some of their concerns, before the lawmakers finally relented.
Negotiations went through the night, but on Friday it emerged that Corker’s demands would not be met. There will be no “trigger” in the bill, nor any other mechanism to make up for a $1 trillion deficit increase that congressional scorekeepers say will result from the bill, even when taking into account economic growth.
Corker was grim-faced as the outcome became clear Friday.
“I am disappointed. I wanted to get to yes,” he said in a statement. “But at the end of the day, I am not able to cast aside my fiscal concerns and vote for legislation that I believe, based on the information I currently have, could deepen the debt burden on future generations.”
Sen. John Cornyn of Texas, the No. 2 Senate Republican, said Corker “obviously has a point of view, which we all respect.”
“But we just think this is a much stronger pro-growth tax reform plan and will produce economic growth that will more than pay for the bill,” Cornyn said. “He’s not so sure.”
Information for this article was contributed by Erica Werner and Damian Paletta of The Washington Post; by Jim Tankersley, Thomas Kaplan and Alan Rappeport of The New York Times; and by Alan Fram, Marcy Gordon and Stephen Ohlemacher of The Associated Press.