Tax mea­sure ad­vances

The Se­nate de­cided along party lines to move a GOP bill to­ward a vote on fi­nal pas­sage by week’s end.

The Washington Post - - FRONT PAGE - BY ERICA WERNER, DAMIAN PALETTA AND MIKE DEBO­NIS

A mas­sive GOP tax bill cleared a key pro­ce­dural hurdle in the Se­nate on Wed­nes­day, as law­mak­ers voted 52 to 48 to move the leg­is­la­tion for­ward to­ward a show­down vote on fi­nal pas­sage by week’s end.

The party-line vote was an im­por­tant vic­tory for Ma­jor­ity Leader Mitch McCon­nell (R-Ky.) and Pres­i­dent Trump, sig­nal­ing sup­port and mo­men­tum for the leg­is­la­tion that over­hauls the tax code for the first time in three decades while de­liv­er­ing enor­mous cuts to cor­po­ra­tions and the wealthy.

But it was not a guar­an­tee of ul­ti­mate suc­cess, as sev­eral Repub­li­can law­mak­ers agreed to open de­bate on the bill so they could pur­sue amend­ments and have not yet com­mit­ted to vot­ing for fi­nal pas­sage. Key is­sues that re­mained in­clude how to pre­vent the bill from driv­ing up the fed­eral deficit by too much and whether to shift more of the leg­is­la­tion’s re­wards from cor­po­ra­tions, which are some of the bill’s main ben­e­fi­cia­ries, to work­ing-class fam­i­lies, who re­ceive more mod­est ben­e­fits.

“Pass­ing tax re­form is the sin­gle most im­por­tant thing we can do right now to shift the econ­omy into high gear and de­liver much-needed re­lief to Amer­i­can fam­i­lies,” McCon­nell said on the Se­nate floor ahead of Wed­nes­day’s vote, as he urged fel­low Repub­li­cans to sup­port the mea­sure to open de­bate.

Pas­sage of the “mo­tion to pro­ceed” started the clock on 20 hours of de­bate on the leg­is­la­tion, which will be fol­lowed by a “vote-a-rama” in which law­mak­ers can of­fer end­less amend­ments into all hours of the night Thurs­day. Then will come the fi­nal vote.

With Democrats unan­i­mously op­posed, McCon­nell can lose only two GOP sen­a­tors in the closely di­vided Se­nate and still pre­vail on the bill. De­spite well­doc­u­mented dis­agree­ments be­tween McCon­nell and Trump, the tax leg­is­la­tion is the top goal for both men as they pur­sue a tax cut sought by donors and cor­po­ra­tions, as well as a po­lit­i­cal vic­tory to present to vot­ers ahead of next year’s midterm elec­tions.

Nu­mer­ous is­sues were be­ing ne­go­ti­ated through­out the day Wed­nes­day, the most prob­lem­atic be­ing de­mands from Sen. Bob Corker (R-Tenn.) and oth­ers for a “trig­ger” to kick in and raise taxes if eco­nomic growth es­ti­mates don’t pan out.

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 to $1.5 tril­lion over 10 years to the fed­eral bud­get deficit.

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 doesn’t ma­te­ri­al­ize.

De­tails of Corker’s trig­ger idea re­mained in flux Wed­nes­day. Ne­go­tia­tors were look­ing at a pack­age that would raise taxes by as much as $350 bil­lion if 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. The peo­ple spoke on the con­di­tion of anonymity be­cause they weren’t au­tho­rized to re­veal pri­vate ne­go­ti­a­tions.

Law­mak­ers were still dis­cussing where the new taxes would come from. One idea be­ing con­sid­ered would in­clude rais­ing the bill’s pro­posed cor­po­rate tax rate of 20 per­cent up to 21 per­cent, re­in­sti­tut­ing the cor­po­rate al­ter­na­tive min­i­mum tax, and re­in­sti­tut­ing the al­ter­na­tive min­i­mum tax paid by in­di­vid­u­als and fam­i­lies.

“A lot of peo­ple hate it, but it may be the only way to get the tax bill passed,” said Steve Moore, a top eco­nomic ad­viser to Trump dur­ing the 2016 cam­paign.

But the idea faces sharp op­po­si­tion within the GOP. Sev­eral Repub­li­cans said they were strongly op­posed to a trig­ger, wor­ried that the pos­si­bil­ity of fu­ture tax in­creases could dampen cor­po­rate en­thu­si­asm.

“There’s one word: It’s cer­tainty,” said Sen. Dean Heller (RNev.). “I do not sup­port trig­gers.”

Other GOP sen­a­tors raised sim­i­lar con­cerns but said they were try­ing to work out a so­lu­tion that all Repub­li­cans could live with. “I don’t want to see this bill de­stroyed be­cause of a pur­suit for per­fec­tion,” said Sen. David Perdue (R-Ga.).

One pos­si­bil­ity dis­cussed by sev­eral sen­a­tors Wed­nes­day would use a trig­ger to prompt spend­ing cuts, not tax in­creases. But GOP aides warned that could cause pro­ce­dural is­sues, threat­en­ing the party’s abil­ity to pass the bill with a sim­ple ma­jor­ity vote.

The trig­ger is­sue was be­ing ne­go­ti­ated along with other mat­ters — in­clud­ing de­mands about ad­di­tional re­lief for busi­nesses whose owners pay taxes through the in­di­vid­ual code, known as “pass-throughs.”

Sen. Steve Daines (R-Mont.), who has been work­ing with Sen. Ron John­son (R-Wis.) on the is­sue, an­nounced that he had se­cured a deal in­creas­ing a tax de­duc­tion the owners of such busi­nesses can take on their in­come from 17.4 per­cent to 20 per­cent, which he said would raise $60 bil­lion for them.

Sen. Su­san Collins of Maine said she was pleased with promised changes from Trump that would al­low Amer­i­cans to deduct up to $10,000 in prop­erty taxes from their tax­able in­come.

Al­low­ing Amer­i­cans to deduct $10,000 in prop­erty taxes could add more than $100 bil­lion to the cost of the tax pack­age over 10 years. But the House bill in­cluded the pro­vi­sion, and nu­mer­ous GOP law­mak­ers there have said it must be in­cluded in the fi­nal bill. Se­nate lead­ers are look­ing at pro­hibit­ing cor­po­ra­tions from de­duct­ing state and lo­cal taxes as a way to raise some of the off­set­ting rev­enue, al­though no fi­nal de­ci­sion has been made, the peo­ple briefed on the talks said.

Other is­sues re­mained out­stand­ing.

Collins, for in­stance, was seek­ing as­sur­ances that the Se­nate will vote on a com­pan­ion health­care bill if the tax leg­is­la­tion re­tains a pro­vi­sion re­peal­ing the Af­ford­able Care Act man­date for nearly all Amer­i­cans to carry health in­surance or pay a fine.

“Su­san’s got a concern; it’s a real le­git­i­mate concern. Ron John­son’s got a concern. There’s a deficit concern,” Sen. Lind­sey O. Gra­ham (R-S.C.) said. “It’s like mak­ing a cock­tail. If you’ve got to add more of this and less of that, I’m fine. Fail­ure’s not an op­tion.”

Repub­li­can lead­ers were un­der pres­sure to make an­other change that could al­ter the bill sig­nif­i­cantly. Sens. Marco Ru­bio (R-Fla.) and Mike Lee (R-Utah) are push­ing an amend­ment that would ex­pand child tax cred­its to mil­lions of poor fam­i­lies, par­tic­u­larly those who don’t pay in­come taxes. To off­set the cost of this change, they pro­pose lift­ing the cor­po­rate tax rate in the bill from 20 per­cent to 22 per­cent.

The change would es­sen­tially trans­fer some of the ben­e­fit of the bill away from cor­po­ra­tions and to­ward low-in­come Amer­i­cans.

They are un­likely to get enough GOP sup­port in the Se­nate to pass their amend­ment, but Democrats could band to­gether and push the amend­ment into the bill if they re­ceive help from only one or two more Repub­li­cans. That could force GOP lead­ers to make a last-minute de­ci­sion about whether to back the child tax credit amend­ment or de­cide whether to pres­sure the law­mak­ers to with­draw it.

Suc­cess on the Se­nate floor can never be as­sured, as il­lus­trated in July when a dra­matic eleven­th­hour de­fec­tion from Sen. John McCain (R-Ariz.) sunk the GOP’s ef­forts to re­peal the Af­ford­able Care Act. But mo­men­tum was slowly gath­er­ing in lead­er­ship’s di­rec­tion, with Sen. Lisa Murkowski (R-Alaska), who op­posed a re­peal of the Af­ford­able Care Act this year, say­ing she planned to back the leg­is­la­tion.

Al­though the leg­is­la­tion would still have to be rec­on­ciled with a House ver­sion, pas­sage on the Se­nate floor this week would clear the bill’s tough­est hurdle and hand a ma­jor vic­tory to Trump and GOP lead­ers.

Repub­li­cans are mov­ing at break­neck speed, shut­ting Democrats out of the process com­pletely as they push a tax code re­write that few un­der­stand and that could have an un­cer­tain im­pact on the en­tire econ­omy and ev­ery Amer­i­can over decades to come.

Nu­mer­ous analy­ses have found the bill dis­pro­por­tion­ately ben­e­fits the wealthy and even hurts poorer Amer­i­cans over time. Trump, GOP lead­ers and many busi­nesses none­the­less in­sist it would be a boon for the econ­omy that would boost growth and help the mid­dle class.

“Our fo­cus is on help­ing the folks who work in the mail rooms and the ma­chine shops of Amer­ica,” Trump said in a speech Wed­nes­day in St. Charles, Mo. “The plumbers. The carpenters. The cops. The teach­ers. The truck drivers. . . . The peo­ple that like me best.”

AN­DREW HARNIK/ASSOCIATED PRESS

Pres­i­dent Trump, Repub­li­can lead­ers and many busi­nesses say the Se­nate GOP’s tax code over­haul bill would be a boon for the econ­omy, lead­ing to more in­vest­ment, hiring and in­creased wages.

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