Key GOP senator won’t back tax plan

WASHINGTON >> A key Senate Republican on Wednesday said he would not support the emerging GOP tax plan and another expressed major reservations about the bill, a thunderclap of trouble for party leaders as they attempt to use a slim Senate majority to pass a major overhaul of the U.S. tax code.

Sen. Ron Johnson, RWis., said he was opposed to the new bill because it disproportionately benefits corporations at the expense of other businesses.

“If they can pass it without me, let them,” Johnson said in an interview with the Wall Street Journal. “I’m not going to vote for this tax package.”

Johnson said later in a statement that he could support a version of the bill if significant changes are made.

Separately, Sen. Susan Collins, R-Maine, said she had major concerns over Republicans changing their tax bill to include language repeal a major part of the Affordable Care Act, saying that was a “mistake.”

The combined warnings from Johnson and Collins cast doubt over whether Republicans can find enough support to pass their bill. The party controls 52 votes in the 100-seat Senate, and ‘no’ votes from Collins and Johnson would mean every other Republican needed to support the bill for it to pass. Should the vote split evenly, Vice President Pence would vote in favor of the bill to break the tie.

There are a number of Senate Republicans who have not said how they will vote on the evolving bill. Sen. Bob Corker, R-Tenn., for example, has said in the past he would not support a tax cut bill that included provisions that expired, as the new GOP bill is designed to do. Asked Wednesday, Corker said he was still reviewing the bill.

Another potential holdout, Sen. John McCain, RAriz., repeatedly declined to say whether he’d vote for a tax bill that includes the proposed Republican change to the Affordable Care Act. McCain, who voted against a previous attempt to repeal the Affordable Care Act, said he wanted to review the tax bill as a whole.

Johnson’s complaint centers on how the Senate bill would tax on corporations versus other businesses.

The measure would permanently lower the corporate tax rate from 35 percent to 20 percent. But it would only temporarily create a new tax deduction for companies that pass through their income to shareholders through the individual income tax code, such as partnerships. Unless Congress acted later to extend those cuts, they would expire after 2025 and revert to the current tax system.

“These businesses truly are the engines of innovation and job creation throughout our economy, and they should not be left behind,” Johnson said in a statement. “Unfortunately, neither the House nor Senate bill provide fair treatment, so I do not support either in their current versions.” By allowing those tax deductions to expire, it would increase taxes these companies pay by around $45 per year in 2026 and 2027, according to a forecast put out by the Joint Committee on Taxation. House Republicans’ version of the tax legislation contains more generous, and permanent, tax cuts for these businesses.

The companies Johnson is referring to are often small businesses, but they can also be companies such as hedge funds, law firms, real estate companies and other large companies. Some companies are treated differently than others in the Senate bill, though changes were made late Tuesday night.

Johnson’s complaints raise a new set of headaches for Republicans. They can’t easily address his issues by cutting taxes for the companies he’s concerned about, as doing that would make the tax package larger and add more to the debt. Under the Senate rules they’re trying to use to pass the bill, they can’t add more tax cuts to the plan without offsetting those changes with other revenue increases.

Senate GOP leaders are hoping to pass their new version of the bill through the Senate Finance Committee this week and then bring a final version of the bill to the Senate floor the week after Thanksgiving. But growing opposition could scuttle those plans, and GOP leaders have had a hard time corralling members on tough votes this year, failing several times to get enough support on health care bills.