GOP criticism of tax bill grows, but few ready to vote against it: Fresh criticisms of the GOP tax bill emerged Tuesday from centrist and conservative Republicans following reports that the legislation would hike taxes on the middle class, as well as some wealthy Americans.
Conservative Sen. Ted Cruz (R-Texas) called raising taxes on people in high-tax, Democratic states like New York and California “a mistake” — a concern shared by Rep. Darrell Issa (R-Calif.), who became the first Golden State Republican to reject the current House bill.
The conservative outside group Club for Growth also outlined four areas that it objected to in the tax bill, including the addition of a fourth tax bracket for millionaires and the fact that the bill phases out the estate tax rather than quickly nixing it.
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Still, most Republicans predicted the bill will pass with a big GOP vote next week. And there was a sense that the small group of on-the-fence lawmakers were holding out simply to extract some last-minute changes ahead of their eventual support: http://bit.ly/2As0I0C.
Day two of contentious tax markup: The House Ways and Means Committee is meeting for a second day on Tuesday to consider the Republican tax-reform bill.
Day one of the markup was often contentious, with Democrats blasting the bill as a boon for the wealthy that would hurt the middle class. Republicans were united in their support for the measure, arguing that it would boost the economy, jobs and after-tax incomes.
On a party-line vote Monday, the panel passed an amendment from Ways and Means Committee Chairman Kevin Brady (R-Texas) that included changes to the bill on the earned income tax credit, carried interest, international tax rules and university endowments.
Amendments from Democrats dominated the day on Tuesday.
Click here for live coverage of day two of the markup.
GOP unlikely to repeal ObamaCare mandate in tax measure: The House is unlikely to repeal the mandate to buy insurance under ObamaCare as part of its tax-reform bill, GOP sources say, though the issue could return down the road.
President Trump and conservative lawmakers are pushing for the individual mandate to be repealed in the bill, but House Ways and Means Committee Chairman Kevin Brady (R-Texas) has expressed worry that the controversial measure would jeopardize the broader tax-reform bill, given the Senate’s failure on health care earlier this year.
“It hasn’t ever been in the [House] bill,” said one Republican on the Ways and Means Committee who has been taking part in the negotiations. “I expect that it will be added somewhere down the sausage-making venture.”
“I agree there is a chance, but I think if it gets included, it would be on the Senate side,” added a second Ways and Means Republican. The Hill’s Peter Sullivan and Scott Wong report: http://bit.ly/2ArUAFg.
GOP lawmaker: Donors are pushing me to get tax reform done: A House Republican lawmaker acknowledged on Tuesday that he’s facing pressure from donors to ensure the GOP tax-reform proposal gets done.
Rep. Chris Collins (R-N.Y.) had been describing the flurry of lobbying from special interests seeking to protect favored tax provisions when a reporter asked if donors are happy with the tax-reform proposal.
“My donors are basically saying, ‘Get it done or don’t ever call me again,’ ” Collins replied.
House GOP leaders are pushing an aggressive timeline for overhauling the tax code for the first time since 1986. They hope to pass the bill, which was only unveiled last week, before Thanksgiving so that it can be enacted into law by the end of the year: http://bit.ly/2ArpCx1.
Happy Tuesday and welcome back to Overnight Finance. I’m Sylvan Lane, and here’s your nightly guide to everything affecting your bills, bank account and bottom line.
See something I missed? Let me know at slane@digital-staging.thehill.com or tweet me @SylvanLane. And if you like your newsletter, you can subscribe to it here: http://bit.ly/1NxxW2N.
On tap tomorrow
- House Financial Services Committee: Hearing entitled “Administration Priorities for the International Financial Institutions,” 10 a.m.
- House Financial Services Committee: Hearing entitled “Financial Intelligence and Enforcement: Treasury’s Role in Safeguarding the American Financial System,” 2 p.m.
Brady: Adoption credit may be added back into tax bill: The adoption tax credit may still be added back into the GOP tax bill, the House’s top tax-writer said Tuesday.
“We’re having — absolutely we’re having these discussions,” Ways and Means Committee Chairman Kevin Brady (R-Texas) said during an interview with conservative radio host Hugh Hewitt. “For me as a pro-life dad and my wife as a pro-life mom, we understand.”
The credit is a one-time tax refund available for parents who adopt from foster care, internationally or through private domestic adoptions. It can be applied over the course of five years. For 2017, the federal adoption tax credit was $13,570.
An adoption can cost as much as $40,000 if a family uses a private agency, according to a survey from Adoptive Families Magazine.
Brady said the credit was removed because there aren’t very many families that are able to take advantage of it. He said more people would benefit under the proposed bill.
“This really is a debate between the old approach and a newer approach that can help more people,” Brady said: http://bit.ly/2ArWh5A.
Club for Growth: GOP tax bill ‘fails the pro-growth test’: The influential conservative nonprofit Club for Growth on Tuesday criticized the House GOP tax plan, calling out four aspects of the plan they say don’t do enough to boost the economy.
The group said provisions in the bill that would reduce benefits for the wealthiest taxpayers “fail the pro-growth test” and don’t follow Republican campaign promises.
“While the corporate tax cut will lead to some increase in our nation’s GDP, the rest of the provisions on individual taxpayers fails the pro-growth test,” Club for Growth President David McIntosh said.
“Republicans must correct at least four serious shortcomings of the House bill to follow through on campaign promises and to bring our nation closer to a tax reform proposal that is truly pro-growth.”
Club for Growth opposes the provisions to create a fourth income tax bracket for the wealthiest payers, a marginal tax rate on earnings above $1.2 million for couples, a tax cut on some earnings for pass-through businesses and a six-year expiration of the estate tax: http://bit.ly/2Ar5oUc.
Cruz: It’s a mistake for House bill to raise taxes: Sen. Ted Cruz (R-Texas) on Tuesday criticized the House GOP tax plan for likely raising taxes on individuals in high-tax states such as New York and California and called for language to repeal the individual mandate to produce more revenue.
Cruz called raising taxes on people in wealthy, staunchly Democratic states such as New York and California “a mistake.”
Cruz has teamed up with fellow conservative Sens. Tom Cotton (R-Ark.) and Rand Paul (R-Ky.) in calling for tax reform to include language repealing ObamaCare’s tax penalty on people who don’t buy health insurance.
The provision would raise an estimated $300 billion to $400 billion over the next decade, which Cruz and other Senate conservatives say could be used to lower individual tax rates even further.
“There are some taxpayers who are losing exemptions, particularly in some high-tax states like New York or California that could conceivably be paying higher taxes. I think that is a mistake. I think tax reform needs to cut taxes for everybody,” Cruz told reporters at a press conference Tuesday: http://bit.ly/2Aqxhfh.
There’s also a slew of new analysis on the tax plan.
New analysis: Majority would benefit from GOP tax plan, but some would see hikes: A new analysis from the Joint Committee on Taxation found that some 61 percent would see their tax bill fall in the first year of the Republican tax plan, while 8.3 percent would see a hike.
Almost a third of taxpayers would not see a change of more than $100 in their favor or against them.
According to the analysis, which was requested by Rep. Richard Neal (Mass.), the ranking Democrat on the House Ways and Means Committee, those differences would change over time.
By 2027, Only 46.2 percent of taxpayers would have a lower tax bill, and 19.5 percent would see their bills go up.
A significant portion of the middle class would see their taxes rise over time: http://bit.ly/2Ar4ibb.
Analysis says House tax bill runs afoul of Senate rules: The GOP tax bill currently being considered in the House would not satisfy stringent Senate rules for avoiding a filibuster, according to an analysis out Tuesday.
Republicans plan on using budget reconciliation, which only requires a simple majority, to pass their tax plan in the Senate. But if portions of the legislation do not adhere to the Byrd rule, named after late Sen. Robert Byrd (D-W.Va.), they can be subjected to the regular 60-vote threshold, which would allow Democrats to tank the bill.
“We estimate the legislation would add about $155 billion to the deficit in 2028; the Byrd rule does not allow reconciliation legislation to add to the deficit at all beyond the budget window (which currently ends in 2027),” the Committee for a Responsible Federal Budget (CRFB) wrote in an review of the legislation.
Changing that could require Republicans to make corporate tax cuts temporary, which the group said could undermine the economic growth they hope to stimulate with the reform.
The bill, the CRFB noted, could also violate the Byrd rule in other, smaller ways: http://bit.ly/2ArErzO.
Fitch Ratings: GOP tax plan will hike deficits, be ‘revenue negative’ The GOP tax plan will increase deficits and only have a short-term effect on growth, according to an analysis by credit ratings agency Fitch.
“Tax cuts may lead to a short-lived boost to output, but Fitch believes that they will not pay for themselves or lead to a permanently higher growth rate,” the analysis said.
Fitch said it expected U.S. gross domestic product growth to peak in 2018 before dropping down to 2.2 percent in 2019. The Trump administration has claimed its reforms would lead to sustained economic growth of 3 percent a year. Treasury Secretary Steven Mnuchin has also claimed that economic growth would cover the deficits, and could even bring them down.
The ratings agency also said that the additional deficits brought on by the tax bill would leave the U.S. exposed when the next economic downturn hit. Policymakers often try to stimulate the economy with tax cuts and deficit spending when recessions hit. An already-deep deficit leaves them with fewer options, and could put the country’s credit rating and borrowing costs at risk when a downturn hits. http://bit.ly/2AsYpKL.
Arizona lawmaker asks for tax cuts be retroactive to 2017: Arizona Republican Rep. Andy Biggs is proposing that the GOP tax plan apply retroactively to 2017, a proposal that could give Republicans a political boost, but further cause the deficit to spike.
In a letter to House Speaker Paul Ryan (R-Wis.) and Ways and Means Committee Chairman Kevin Brady (R-Texas), Biggs argued that Republicans may not accrue the political benefit of the tax reform without retroactive cuts.
“While I appreciate that filers will see immediate benefits arising from decreased withholding in their paychecks already by January 2018, these same taxpayers will also fail to notice that their respective tax burdens have not decreased. Needless to say, the political fallout for Republicans could be dire,” he wrote.
Republicans hope to pass the current plan and have it signed into law by the end of 2017, and that the projected injection of cash into taxpayers’ paychecks will give the GOP momentum heading into the 2018 midterm elections.
Applying the cuts retroactively would result in a big, lump sum return for many taxpayers, but also add extensively to the deficit. http://bit.ly/2ApRmSK.
In non-tax news…
House passes bill to overturn controversial joint-employer ruling: The House on Tuesday evening passed a bill that would overturn an Obama-era National Labor Relations Board ruling that made companies potentially liable for labor law violations committed by their subcontractors.
The Save Local Business Act, sponsored by Rep. Bradley Byrne (R-Ala.), was approved 242-181 despite pushback from Democrats, who argued the bill gives a free pass to unscrupulous companies that steal wages, fail to pay overtime and break child labor laws.
Republicans say the activist labor board under the Obama administration created massive confusion when it ruled in 2015 that an employer is considered a joint employer with a subcontractor if it has “indirect” control over the terms and conditions of employment or has the “reserved authority to do so.”
The bill would change that definition under the National Labor Relations Act (NLRA) and the Fair Labor Standards Act (FLSA) to state a company is only considered a joint employer if it “directly, actually and immediately” has control over essential terms and conditions of employment. http://bit.ly/2ygxFLZ
Trump credits ‘confidence’ in administration for stock market record: President Trump on Tuesday took credit for record stock market highs, citing the “confidence” in his push for tax cuts.
“Stock market hit yet another all-time record high yesterday,” Trump wrote on Twitter from South Korea.
“There is great confidence in the moves that my Administration is making. Working very hard on TAX CUTS for the middle class, companies and jobs!”
The Nasdaq Composite Index, the S&P 500 Index and the Dow Jones Industrial Average ended Monday reaching record heights: http://bit.ly/2ApEjRk.
Senate panel approves North Korea banking sanctions: The Senate Banking Committee on Tuesday unanimously approved new financial sanctions targeting North Korea and the businesses who help finance Kim Jong Un’s government.
The proposed sanctions reflect efforts passed by the House and enacted via executive order by President Trump to bar any firm that does business with North Korea from the U.S. financial system.
The Banking panel voted to recommend the Otto Warmbier Banking Restrictions Involving North Korea (BRINK) Act after a Tuesday markup. The bill’s namesake was a college student from Ohio who died earlier this year after being imprisoned and tortured by North Korean officials while visiting the country in 2016.
“The time has come for the U.S. to take the lead to ensure that all nations work together to isolate the Kim regime until it has no choice but to change its dangerous, belligerent behavior,” said Banking Committee Chairman Mike Crapo (R-Idaho) in a statement after the vote.
The bill targets the network of front companies, bank accounts, and private businesses the North Korean government uses to fund its military and operations: http://bit.ly/2ApGVyC.
Forbes: Wilbur Ross overstated wealth by $2 billion: Commerce Secretary Wilbur Ross purposefully overstated his wealth by about $2 billion in statements to Forbes Magazine, according to the publication’s editors.
The business news magazine accused Ross of lying about “more than $2 billion” for more than a decade in order to be placed on The Forbes 400 and to “bolster his standing” among the business community in a way that created opportunities for himself.
In an article Tuesday, Forbes’s Dan Alexander explains that Ross lied about placing the money in trusts for his family during his nomination process in order to remain on the list.
“After one month of digging, Forbes is confident it has found the answer,” Alexander writes. “That money never existed. It seems clear that Ross lied to us, the latest in an apparent sequence of fibs, exaggerations, omissions, fabrications and whoppers that have been going on with Forbes since 2004.”
When asked about documentation for the trusts, Ross refused Forbes’s request, citing “privacy issues.”
Ross was initially placed on the Forbes billionaire list in 2004 with a net worth listed at $1 billion. His business colleagues told the magazine that the 2004 number was inflated to almost four times Ross’s actual wealth: http://bit.ly/2AsZXEz.
From The Hill’s opinion pages
Don’t buy the trickle-down myth peddled by GOP tax plan, by Josh Bivens
The GOP tax plan is worth the risk, by Aparna Mathur
Details show tax bill isn’t really about competiveness or workers, by Kimberly Clausing
Tax reform must help workers in America’s new sharing economy, by Jenny Beth Martin
Write us with tips, suggestions and news: slane@digital-staging.thehill.com, vneedham@digital-staging.thehill.com, njagoda@digital-staging.thehill.com and nelis@digital-staging.thehill.com. Follow us on Twitter: @SylvanLane, @VickofTheHill, @NJagoda and @NivElis