GOP leaders win two key votes for tax legislation

Sens. Steve Daines (R-Mont.) and Ron Johnson (R-Wis.) are now planning to vote for the Senate tax bill after getting a deal for more tax relief for small businesses and other “pass-through” entities.

“After weeks of fighting for Main Street businesses including Montana’s farmers and ranchers, I’ve decided to support the Senate tax cut bill which provides significant tax relief for Main Street businesses,” Daines said in a statement.

“With 68% of Montana’s jobs created by Main Street businesses, this is much needed relief that will help spur economic growth and provide higher paying jobs.”

A spokesperson for Johnson confirmed that the Wisconsin Republican would also be a yes vote.

Daines and Johnson had earlier come out against the version of the bill that passed the Senate Finance Committee, saying it didn’t do enough to help pass-through businesses.

Pass-throughs are entities such as partnerships and sole proprietorships whose income is taxed through the individual code. Small businesses tend to be pass-throughs.

The Senate bill initially included a 17.4 percent deduction for pass-through businesses. Daines’s office said the senator has gotten a commitment that the deduction will be increased to 23 percent.

“The win that we obtained last night … really it’s a $100 billion tax cut for these Main Street businesses,” Daines said Friday on “Fox & Friends First.”

He said his change would allow the effective tax rate for pass-throughs to fall below 30 percent. Pass-through income can currently be taxed at rates as high as 39.6 percent.

A vote on final passage of the tax bill could come as early as Friday. Support for the bill from Daines and Johnson will give Republicans a boost, but challenges remain.

Lawmakers are still working to address the concerns of deficit hawks like Sen. Bob Corker (R-Tenn.).

Deficit hawks had been pushing for a “trigger” to scale back tax cuts if economic growth projections aren’t met, but the Senate parliamentarian ruled that this does not comply with budget rules.

Lawmakers are now looking at automatic tax increases in future years in order to ease concerns about the bill’s impact on the debt.

Updated at 8:47 a.m.