‘ Trigger’ proposal imperils tax bill
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.