Tax plan tax-hike trigger studied
GOP sees option as easing deficit fears
WASHINGTON — With a renewed push from President Donald Trump, GOP Senate leaders scrambled Monday to revise their tax reform plan to win over skeptics ahead of this week’s crucial vote.
Republicans are considering a trigger that would automatically increase taxes if their sweeping legislation fails to generate as much revenue as they expect. It is an effort to mollify deficit hawks who worry that tax cuts for businesses and individuals will add to the nation’s already mounting debt.
Sen. Bob Corker, R-Tenn., said the Trump administration and Senate Republican leaders are open to some kind of a trigger to increase revenues if the tax plan falls short.
That development came as several Republican senators voiced new reservations about the bill, a $1.5 trillion package that could become the most significant achievement of Trump’s first year in office but
“I am confident we’re gong to get this done soon, get it to the president’s desk.” U.S. Sen. Pat Toomey, R-Pa.
has low public support among voters. Some senators fear the bill is too heavily tilted in favor of corporations and the wealthy and does not do enough for small-business owners or ordinary Americans.
An analysis Monday from the nonpartisan Congressional Budget Office said households with incomes of $30,000 or less would pay more or receive fewer federal benefits under the GOP proposal, confirming earlier assessments.
Also Monday, key Republican senators met with Trump for lunch at the White House. Afterward, they downplayed the mounting concerns but acknowledged the difficulty ahead because they can afford to lose only two votes in the Senate with their narrow 52-seat majority.
Trump will head to Capitol Hill today to meet with all GOP senators about the tax plan.
During the weekend he called Sen. Steve Daines after the Montanan became the second GOP senator to oppose the tax overhaul, putting it at risk of defeat. Daines raised concerns similar to those of Sen. Ron Johnson, R-Wis., about the bill’s treatment of small business owners, who they argue would not benefit as much from the bill as corporations.
The Senate bill follows a similar legislative structure as the measure approved by House Republicans in lowering corporate and some individual tax rates but dothat ing away with many popular deductions.
Johnson and other senators have suggested one way to improve the bill for socalled pass-through businesses would be to clamp down on deductions for corporations and use those savings to provide more assistance to smaller firms.
“I told the president this would be a great solution to help out these Main Street businesses in America,” Daines said Monday. “He liked the idea.”
Critics have pointed to the ability of corporations to continue to write off state and local taxes. By contrast, individuals or those filing as pass-throughs would no longer be able to do so under the GOP bills.
Eliminating the state and local tax deduction has been a constant source of debate in Congress because it brings in more than $1 trillion in revenue over 10 years. But eliminating the write-off would hit residents in high-tax states such as New York, New Jersey and California, who use it to lower their tax bills.
GOP Sen. Susan Collins of Maine prefers the House approach, which retained the local property tax deduction, capped at $10,000. She is trying to reinstate in the Senate version of the bill. Collins also objected to a provision that repeals the Affordable Care Act mandate that all Americans carry insurance, which the CBO report estimated would leave 13 million more Americans uninsured by 2027. She wants that provision offset by a separate bill that aims to help stabilize insurance markets.
To make up for the lost revenue, senators may consider increasing the corporate tax rate, which under the bills would be reduced from 35 percent to 20 percent. Under the Senate plan, corporate cuts are permanent, while individual cuts expire in eight years.
“I am confident we’re gong to get this done soon, get it to the president’s desk,” said Sen. Pat Toomey, R-Pa., after the White House meeting.
A new congressional estimate says the Senate tax bill would add $1.4 trillion to the budget deficit during the next decade. But GOP leaders dispute the estimate, saying tax cuts will spur economic growth, reducing the hit on the deficit.
Many economists disagree with such optimistic projections.
“Do we have realistic numbers, and is there a backstop in the process just in case we don’t?” asked Sen. James Lankford, ROkla.
“We should build in the ‘What if?’ What if this doesn’t work?” Lankford said. “What changes might be needed in the tax code in the days ahead to be able to adjust in what scenario?”
Neither Corker of Tennessee nor Lankford spelled out exactly how the trigger would work. Sen. Rob Portman, R-Ohio, said the trigger is possible. But, he added, the proposal could run afoul of the Senate’s byzantine budget rules.
The tax package got a boost Monday when Sen. Rand Paul, R-Ky., announced he would back it. “This bill is not perfect,” Paul wrote in an op-ed on FoxNews.com. “Will we keep our word and cut taxes?”