Senate rushes forward with tax code overhaul

Republicans split over tax increase trigger

WASHINGTON — Senate Republicans are barreling forward on their massive bill to overhaul the tax code, with a key procedural vote set for Wednesday afternoon.

But they are still wrestling over key details that could swing hundreds of billions of dollars back and forth, with key lawmakers digging in on either side.

The most divisive issue on Wednesday was a demand from Sen. Bob Corker, R-Tenn., and others that Republicans put in place a “trigger” that would automatically raise taxes if certain growth targets aren’t met. Corker has threatened to oppose the bill if a version of this idea isn’t put into the final version, and he said Tuesday that he had reached a deal on the issue.

As the potential parameters emerged of that deal, several Republicans said Wednesday they were very opposed to including it, worried that the possibility of future tax increases could dampen corporate enthusiasm.

Details of Corker’s trigger idea remained in flux Wednesday, but negotiators were looking at a package that would add as much as $350 billion in the economy doesn’t grow by more than 0.4 percent yearly above a baseline established by the Congressional Budget Office, according to several people briefed on the discussions who spoke on the condition of anonymity because they weren’t authorized to reveal private negotiations.

The new revenue would come from several places, though details were still being worked out.

Some ideas under discussion would include raising the bill’s proposed corporate tax rate of 20 percent to 21 percent, reinstituting the corporate alternative-minimum tax, and reinstituting the alternative minimum tax paid by individuals and families.

Under the bill as written, the alternative minimum tax for corporations and individuals is scheduled to be eliminated, and the corporate tax rate would be lowered from 35 percent to 20 percent in 2019.

Corker’s demand for the trigger provision stems from concern over how the bill would affect the federal budget.

The total package of tax cuts is projected to add $1.4 trillion over 10 years to the national debt, and Republicans are expected to make a number of changes in the next two days to push the addition up to $1.5 trillion.

Republicans have promised that the package of tax cuts would spur more economic growth, leading to more investment, hiring, and higher wages for workers. But many economists dispute these forecasts, and Corker has sought assurances that some steps would automatically be taken if growth didn’t perform as promised.

In its most recent economic forecast, CBO projected rather weak growth over the next five years, predicting the economy would grow by 2.2 percent in 2017, 2.0 percent in 2018, and averaging 1.5 percent in 2019 and 2020.

The economy is already showing signs of growing faster than that. It has grown faster than 3.0 percent in each of the past two quarters, though it hasn’t notched an annual growth rate of that high in years.

It’s unclear if these details will all be settled by Wednesday afternoon. Wednesday’s vote is a strong sign of confidence from Majority Leader Mitch McConnell. The Kentucky Republican and his lieutenants have been frantically wrangling support from their fractious majority for the bill that would totally remake the tax system for the first time in three decades. They hope to continue pressing and pass a complete version of the tax plan as soon as Thursday or Friday.

Still, it was possible the vote could be delayed if leaders were unable to secure support from some key holdouts. Republicans control 52 votes in the 100-seat Senate, and three defections could mean the bill faltered.

One other unresolved issue remains the business tax cuts that GOP Sen. Ron Johnson, R-Wis., continues to demand. He wants taxes to be lowered for socalled pass through companies whose owners pay taxes through the individual code instead of using corporate rates.

Johnson himself retains partial ownership of a plastics manufacturing company in Oshkosh, Wis., that could benefit from such changes.

Both Corker and Johnson on Tuesday voted in the Senate Budget Committee to move the tax bill to the Senate floor, suggesting that neither was willing to stand in the way of its passage so far.

Numerous analyses have found the bill disproportionately benefits the wealthy and even hurts poorer Americans over time. Nonetheless Trump, GOP leaders, and business insist it would be a boon for the economy that would boost growth. And after failing to pass any major legislation so far this year despite full control of Congress and the White House, Republicans are hungering for a win.

House Majority Leader Kevin McCarthy, R-Calif., said Wednesday that House lawmakers should be ready to mobilize quickly to work out differences with Senate colleagues over their bills.

He told members in a closeddoor meeting they could vote to start the conference process as soon as Friday.