Senate GOP moves forward on taxes

Senate Republicans began marking up their tax package on Monday as Majority Leader Mitch McConnell (R-Ky.) said he hoped to start floor consideration the week after Thanksgiving.

The first day of the Senate Finance Committee hearing featured Republicans and Democrats exchanging jabs over the proposal to slash corporate taxes and reduce individual rates, while closing some tax breaks.

{mosads}The House is expected to pass its version of the bill Thursday as Republicans seek to put a bill on President Trump’s desk by year’s end.

It’s a heavy lift, given the tight time frame and differences between the chamber’s bills, though so far Republicans are hitting their marks.

Senate Finance Committee Chairman Orrin Hatch (R-Utah) sought to highlight aspects of the measure that Democrats have supported in the past, including its preservation of some individual tax breaks and changes to the international tax system.

“Long story short: Our proposed international reforms are not just a Republican wish list or some sort of favor to big companies,” he said. “They are, in fact, well within the bipartisan mainstream.” 

Republicans also sought to rebut Democratic criticisms that they were shut out of the drafting process and that the bill benefits the rich. GOP lawmakers noted that the Joint Committee on Taxation (JCT) estimated that people in all income groups would get tax cuts on average.

But Democrats were unconvinced that the bill would benefit the middle class, pointing out that the JCT also found that millions of Americans would see tax increases. 

“The bill has the power to reshape the American economy in ways that will leave a lot and a lot of Americans worse off,” said Finance Committee ranking member Ron Wyden (D-Ore.).

Democrats also hammered the bill for adding to the debt. The current version of the bill would likely add $1.5 trillion to the debt over a decade.

Several panel Democrats are up for reelection next year in states Trump won in 2016. Those lawmakers also criticized the process and substance of the bill.

“What’s before us today … is not tax reform that prioritizes the middle class but a tax scheme that’s a giveaway to the super rich and big corporations at the expense of some, even many, middle-class families,” said Sen. Bob Casey Jr. (D-Pa.).

The markup will continue Tuesday, when lawmakers will question JCT officials and potentially begin to discuss amendments.

Lawmakers have submitted some 355 amendments, though not all of them will be considered.

A notable one from Hatch would make unspecified changes to ensure the bill doesn’t add to the deficit after 10 years. The legislation can’t increase the deficit outside of the budget window if Republicans want to pass it with only a simple majority.

One way to prevent the bill from adding to the deficit after 10 years would be to have some tax cuts expire. Hatch said Monday that he has “every intention of making the business reforms permanent.”

McConnell said Monday that he hopes the Finance Committee approves the bill by the end of the week. He plans for the measure to be considered on the Senate floor the week after Thanksgiving.

Republicans have little room for defections in the Senate, where they will likely need votes from 50 of the 52 GOP senators to pass the tax bill.

No GOP senators have said as of Monday afternoon that they will vote against the bill.

However, Sens. Jeff Flake (R-Ariz.) and James Lankford (R-Okla.) have expressed concerns about how the legislation might bloat the debt, and Sens. Marco Rubio (R-Fla.) and Mike Lee (R-Utah) are pushing for a bigger child tax credit.

The House Ways and Means Committee last week advanced their version of the tax bill, which appears headed for a fairly easy vote on the House floor later this week.

A handful of House GOP members have come out against the bill — mostly lawmakers from high-tax states such as New York and New Jersey who are concerned about the bill’s scale-back of the state and local tax deduction.

Discussions are now moving to how to resolve differences between the House and Senate products.

Notably, the Senate bill would delay the corporate tax rate cut until 2019, while the House bill has the cut take effect more immediately. The Senate bill also repeals the full state and local tax deduction, while the House bill retains a property tax deduction of up to $10,000 in order to help win the support of some blue-state GOP lawmakers.

Complete elimination of the deduction would jeopardize the House’s ability to pass the final product.

House Ways and Means Committee Chairman Kevin Brady (R-Texas) made it clear that he will fight to keep the $10,000 property tax deduction in the final bill.

“That’s our priority. I’m committed to it,” he told reporters Monday. “And at the end of the day, it’s going to be in that bill.”

Trump may be complicating the process. The president interjected himself in the debate again Monday by proposing that legislation include repeal of ObamaCare’s individual insurance mandate and lower the top individual tax rate to 35 percent.

The House bill maintains a top individual tax rate of 39.6 percent, while the Senate bill lowers the top rate slightly to 38.5 percent. Neither bill repeals the individual mandate.

GOP lawmakers say they’re still considering including individual mandate repeal in the tax legislation, but Brady also said he doesn’t expect major changes to the House bill before it comes to the floor.

While Trump’s tweets throw new curves into the debate, Republicans also view him as an asset in rallying the conference on taxes. The president will address the House GOP conference Thursday morning, ahead of the chamber’s vote.

Cristina Marcos contributed.