‘ Trig­ger’ pro­posal im­per­ils tax bill

The Columbus Dispatch - - Front Page - By Stephen Oh­lemacher and Marcy Gor­don

WASH­ING­TON — Con­ser­va­tive groups and law­mak­ers are lin­ing up against a pro­posal by Se­nate Repub­li­cans to im­pose au­to­matic tax in­creases on mil­lions of Amer­i­cans if their sweep­ing tax pack­age doesn’t grow the econ­omy and raise tax rev­enue as much as pro­jected.

The op­po­si­tion came as the tax pack­age cleared a key pro­ce­dural vote in the Se­nate on Wed­nes­day. The Se­nate voted 52-48 to start de­bat­ing the bill. Wed­nes­day’s vote po­ten­tially could pave the way for the Se­nate to pass the pack­age this week. The Se­nate could start vot­ing on amend­ments Thurs­day evening.

But op­po­si­tion to the tax “trig­ger” could doom a del­i­cately ne­go­ti­ated pro­posal aimed at mol­li­fy­ing deficit hawks who worry that tax cuts for busi­nesses and in­di­vid­u­als could add tril­lions to the mount­ing na­tional debt.

Tuck­ing a po­ten­tial tax in­crease into the tax-cut

bill isn’t sit­ting well with con­ser­va­tives.

“Au­to­matic tax in­creases are a spe­cial level of in­san­ity,” said Rep. Trent Franks, R-Ariz. “I don’t think it sur­vives.”

Rep. Jeb Hen­sar­ling, R-Texas, called the pro­posal “a uniquely bad idea,” es­pe­cially if rev­enue falls short be­cause of an un­fore­seen slow­down in the econ­omy.

Rep. Mark San­ford, R-S.C., said the threat of an au­to­matic tax in­crease would make busi­nesses re­luc­tant to in­vest.

“If busi­nesses or in­di­vid­u­als have no abil­ity to plan on a rate, it makes an in­vest­ment de­ci­sion, for in­stance, very, very dif­fi­cult,” San­ford said.

The pro­posal is be­ing pushed by Repub­li­can Sens. Bob Corker of Ten­nessee, James Lank­ford of Ok­la­homa and Jeff Flake of Ari­zona. It is pick­ing up steam in the GOP­con­trolled Se­nate, even if it could land with a thud in the GOP-con­trolled House.

Corker said he has re­ceived as­sur­ances from Repub­li­can Se­nate lead­ers and the White House that some sort of “trig­ger” would be added to the Se­nate pack­age that would in­crease taxes if the econ­omy doesn’t grow — and tax rev­enue doesn’t in­crease — as much as pro­jected.

Sen­a­tors are also con­sid­er­ing a com­pan­ion pro­posal from Sen. Ted Cruz, R-Texas, that would au­to­mat­i­cally cut taxes fur­ther if the econ­omy grows faster than ex­pected.

The over­all pack­age is a blend of gen­er­ous tax cuts for busi­nesses and more-mod­est tax cuts for fam­i­lies and in­di­vid­u­als. In craft­ing the bill, Se­nate Ma­jor­ity Leader Mitch McCon­nell, R-Ky., has been try­ing to bal­ance some­times com­pet­ing in­ter­ests with very lit­tle room for er­ror. Sen. Steve Daines, R-Mont., said Wed­nes­day that he would sup­port the bill after reach­ing a deal to sweeten tax cuts for busi­ness own­ers who re­port their busi­ness in­come on their in­di­vid­ual tax re­turns.

Se­nate Repub­li­cans hold a slim 52-48 ma­jor­ity in the Se­nate, mean­ing they can only lose two votes, with Vice Pres­i­dent Mike Pence cast­ing the tie-breaker. Democrats, who have been ex­cluded from craft­ing the bill, are ex­pected to unan­i­mously op­pose it.

An es­ti­mate by con­gres­sional an­a­lysts says the Se­nate tax bill would add $1.4 tril­lion to the bud­get deficit over the next decade. GOP lead­ers dis­pute the pro­jec­tion, say­ing tax cuts will spur eco­nomic growth, re­duc­ing the hit on the deficit.

Many economists dis­agree with such op­ti­mistic pro­jec­tions.

Trump, mean­while, flew to Mis­souri on Wed­nes­day to talk about tax cuts, say­ing they would lift Main Street and the mid­dle class. But he kept re­peat­ing un­founded claims that the Se­nate tax bill would hurt rich peo­ple, him­self in­cluded.

“This is go­ing to cost me a for­tune, this thing, be­lieve me,” Trump said, in the midst of a fre­quently me­an­der­ing 45-minute speech to a fes­tive crowd of 1,000 in St. Charles.

Trump would al­most cer­tainly ben­e­fit from the Se­nate bill’s slight re­duc­tion

in the top mar­ginal in­cometax rate — and ben­e­fit greatly from both bills’ pro­vi­sions that would lower taxes dra­mat­i­cally for own­ers of so-called pass-through com­pa­nies, which is the struc­ture of the bulk of Trump’s busi­ness em­pire.

The New York Times re­ported Wed­nes­day night that Trump had urged sen­a­tors this month to re­peal the Af­ford­able Care Act’s re­quire­ment that most Amer­i­cans have health in­surance and use the pro­ceeds to slash the top tax rate paid by the rich­est Amer­i­cans, a sug­ges­tion that pit­ted his pri­or­i­ties against his daugh­ter Ivanka’s.

In the end, the pres­i­dent got the re­peal of the health law’s in­di­vid­ual man­date added to the Se­nate tax bill but gave up on the lower in­come-tax rate cut. In­stead, Ivanka Trump and her al­lies in the Se­nate pre­vailed in push­ing an ex­panded child tax credit.

But the fight is ac­tu­ally con­tin­u­ing. Some sen­a­tors plan to of­fer an amend­ment that would cut the cor­po­rate tax rate to 22 per­cent, in­stead of the 20 per­cent that Trump wants, and use the pro­ceeds to help fam­i­lies with lit­tle or no in­come-tax li­a­bil­i­ties ben­e­fit from the ex­panded child credit and to al­low the child credit to rise with in­fla­tion.

A White House spokesman, Raj Shah, said the pres­i­dent is op­posed to that.

“Au­to­matic tax in­creases are a spe­cial level of in­san­ity. I don’t think (the bill) sur­vives.”

— Rep. Trent Franks, R-Ariz.

Corker

[AN­DREW HARNIK/THE AS­SO­CI­ATED PRESS]

Pres­i­dent Don­ald Trump points to a sign that reads “Merry Christmas” as he ar­rives Wed­nes­day at a con­ven­tion cen­ter in St. Charles, Mo., to speak about tax cuts. Trump has made say­ing “Merry Christmas” a pri­or­ity.

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