Posts Tagged ‘Senate Finance Committee’

These Eight Senators Can Make or Break the GOP Tax Plan

November 28, 2017

Bloomberg

By Sahil Kapur

  • Concerns center on partnerships, deficits and health care
  • Senate’s top tax writer foresees ‘tough, tough time’

U.S. President Donald Trump plans to meet Tuesday with Senate Republicans in a crucial week for his presidency and his tax plan that could decide whether he ends his first year with a major legislative achievement.

Last-minute threats to the tax cuts that Trump has promised since early in his long-shot presidential campaign are looming among Senate Republicans. Concerns center on the taxation of partnerships, limited liabilities and other companies; on the overall cost of the tax bill itself; and on a familiar GOP stumbling block — Obamacare.

“It’s not going to be easy,” Senate Finance Committee Chairman Orrin Hatch of Utah said Monday. “This is going to be a tough, tough time.”

Senate Republican leaders aren’t counting on any Democrats for a floor vote that could come Thursday or Friday — but that means they can afford to lose only two members of their own party. Here are the eight GOP senators most likely to decide the tax bill’s fate.

Bob Corker, Jeff Flake and James Lankford

Corker, the retiring Tennessee Republican has staked a hard line against letting tax legislation add to federal deficits — saying that a single penny of new deficits would lose his vote. It turns out the Senate bill would add $1.4 trillion to the deficit over 10 years — at least before accounting for any economic growth — according to a Congressional Budget Office report released Sunday.

The bill’s supporters say it’ll boost economic growth enough to cover that shortfall, but Corker says he’s not satisfied. He wants a backstop mechanism — essentially a tax-increase trigger that would raise revenue in case the promised growth doesn’t result. Arizona’s Flake and Oklahoma’s Lankford also support that kind of trigger.

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From the Left:  Sens. Jeff Flake (R., Ariz.), Bob Corker (R., Tenn.) and James Lankford (R., Okla.)

“Every economist is guessing,” Lankford said on Monday. “We should build in the ‘what if’ — what if this doesn’t work?’ If the revenue is not coming in, should the rates change?”

Corker is a member of the Senate Budget Committee, which meets Tuesday afternoon to decide whether to send the tax bill to the Senate floor. Republicans have a one-vote margin on the panel and cannot afford any defections. Corker said Monday he may vote no if tax writers — who he said would be working overnight on a provision — can’t provide enough deficit safeguards.

“We’re working very closely with the administration and also some members of the Finance Committee to design a trigger or backstop that in the event the revenues are not there, there’s a way to recoup them,” he said.

Some senators want nothing to do with a trigger. “I think the problem with triggers is they create uncertainty about what the tax rate is” since it’s subject to change, said Republican Pat Toomey of Pennsylvania, during a Bloomberg Television interview. Resulting hesitancy among investors could make the predictions of too little growth “a self-fulfilling prophecy,” he said.

Corker disagrees. “There are ways of doing this that you don’t damage the aspects that are very pro-growth,” he said.

Flake and Corker have two things in common beyond deficit concerns: Both are retiring after 2018, and both have sparred extensively with Trump. So it’s unlikely that any presidential salesmanship would sway either one.

“He’ll be a NO on tax cuts because his political career anyway is ‘toast,”’ Trump said on Twitter this month about Flake, whom he called “Jeff Flake(y).”

Ron Johnson and Steve Daines

Johnson became the first Republican senator to come out against the bill, and his vote remains up in the air. His concern? The legislation gives an advantage to large corporations at the expense of “pass-through” businesses, like the plastics company he used to run before his election to the Senate in 2010.

The Wisconsin senator is also a member of the Budget Committee, and he too wants his concern addressed by the time it meets. “I’m not exactly sure what’s going to happen in committee, and we’re working diligently to fix the problem,” he told reporters Monday. “If we develop a fix prior to committee, I’ll probably support it but if we don’t, I’ll vote against it.”

The Senate bill cuts the corporate rate to 20 percent, while creating a special deduction for business income from pass-through entities that would leave many owners paying an effective top rate of more than 30 percent. Johnson wants to give those owners a larger deduction, and he said many have called to encourage him to stand firm.

Daines, a Montana Republican, joined Johnson Monday in opposing the bill as written, and for the same reason. An aide said Daines remains optimistic the legislation will change enough to win his vote.

A deal had yet to emerge Monday night. “We’re still negotiating; let’s put it that way,” said South Dakota Senator John Thune, the chamber’s third-ranking Republican leader, after an evening meeting of the Finance panel.

Daines says the more generous tax cut that he and Johnson favor would cost about $60 billion more over 10 years — and they have a proposal to pay for it: Eliminate the income-tax deduction that corporations can take for the state and local taxes they pay.

A similar provision to eliminate so-called SALT deductions for individuals has stirred opposition among Republican House members in high-tax states; adding corporations to the list may engender still more resistance.

Susan Collins

The moderate from Maine is the only Republican senator from a reliably Democratic-leaning state, and as such she’s always a difficult vote for party leaders. While Collins was initially warm to the tax bill, she has turned sour after party leaders opted to add repeal of the Obamacare individual mandate to help limit deficits.

Susan Collins

Collins said it’s a mistake to ax the mandate in tax legislation, fearing that it’ll cause healthy people to drop their coverage and drive premiums higher for others — the same reason she cast a pivotal vote to block an Obamacare repeal bill in July. “I hope that will be dropped,” she said recently.

But eliminating the mandate is estimated to save the federal government more than $300 billion over 10 years — savings that would result from less demand for federal health-coverage subsidies. Some GOP leaders dispute that estimate, even though their tax bill depends on it to stay within budget rules.

Collins has also said she opposes lowering the top individual rate from 39.6 percent to 38.5 percent, as the Senate bill does.

John McCain

Nobody is taking McCain’s vote for granted after he shocked the political world by voting against a rushed attempt to demolish the Affordable Care Act this summer.

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He then delivered a speech demanding the Senate return to regular order — hearings, markups, bipartisan input and amendments — for passing major bills. So far, McCain has been warm to the GOP Senate’s tax effort, but he hasn’t taken an official position on the legislation.

McCain has a mixed record on tax cuts, voting against measures in 2001 and 2003. The top legislative priority of the Arizona Republican, who is 81 and fighting brain cancer, is to boost military spending. His vote on the tax bill could be in peril if he believes the $1.4 trillion in new deficits would put downward pressure on Pentagon funding.

Jerry Moran

The Kansas Republican is sensitive about the impacts of the bill in the wake of his state’s failed tax-cut experiment that lawmakers there ended this year to escape a fiscal crisis.

“I’m also cognizant of what people saw happen in Kansas,” Moran told constituents over Thanksgiving weekend, as quoted by the Topeka Capital-Journal. “The issue of tax cuts would be easier if you actually had faith that Congress would hold the line on spending. It’s two components. It’s how much revenue you take in and how much money you continue to spend.”

Overall, Moran remained circumspect about the legislation, saying the goal must be to find tax cuts that grow the economy without raising the debt.

— With assistance by Laura Davison, and Kaustuv Basu

https://www.bloomberg.com/news/articles/2017-11-28/these-eight-senators-can-make-or-break-trump-s-tax-cut-this-week

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Senators Seek Changes to Tax Bill as Busy Week Kicks Off

November 27, 2017

Pass-through business income, budget deficits and repeal of ACA mandate are all sources of friction

Susan Collins

WASHINGTON—Senators on Monday began a frenzied week of meetings, negotiations and amendments as Republicans try to find 50 votes for their tax bill.

Possible changes to the version that emerged from the Senate Finance Committee include a bigger tax break for pass-through firms such as partnerships that pay business taxes through their owners’ individual returns.

One option is allowing a 20% deduction for pass-through business income instead of the 17.4% deduction in the committee’s bill, said Sen. Ron Johnson (R., Wis.), who has said he opposes the bill unless changes are made. Mr. Johnson said he spoke with President Donald Trump and Vice President Mike Pence about the issue over the weekend.

“They agreed this is a problem to be fixed and we’ll get it fixed,” Mr. Johnson said Monday.

The bill is the GOP’s biggest domestic-policy priority, and it would lower most households’ individual taxes through 2025 and cut the corporate tax rate permanently. Some households, particularly upper-middle-class wage-earners in high-tax states, would pay more than they do now.

Party leaders are trying to push the bill through the Senate this week and get a final bill to Mr. Trump’s desk by the end of the year. They control 52 seats in the Senate, meaning they can lose just two votes, assuming no Democratic support.

Besides Mr. Johnson, several other GOP senators have flagged potential problems. Sens. Jeff Flake (R., Ariz.), Bob Corker (R., Tenn.) and James Lankford (R., Okla.) are concerned about budget deficits; the bill would increase deficits by $1.4 trillion over a decade and by even more if future Congresses extend the expiring tax cuts included in the plan.

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From the Left:  Sens. Jeff Flake (R., Ariz.), Bob Corker (R., Tenn.) and James Lankford (R., Okla.)

Mr. Lankford wants the tax bill to include a mechanism that would adjust taxes in the event that Republican expectations that tax cuts would pay for themselves prove wrong.

“From Oklahoma and Kansas and those of us in the middle of the country, we have seen some of this in our own state legislatures,” Mr. Lankford said. “I think it’s important that we learn some of those lessons what we’ve seen in states, and to be able to put into place at the beginning a backstop a procedure to make sure we’re guarding against this.”

Mr. Lankford said that a number of different options were under discussion. “If the revenue is not coming in, should the rates change?” he said.

Mr. Corker has been working on a “responsible path forward” with senators and the administration, said his spokeswoman, Micah Johnson.

“While more work remains, all parties are hopeful that the final bill will be good for our country,” she said.

Sen. Susan Collins (R., Maine) objects to using the bill to repeal the individual mandate to have health insurance. As a result of that policy and the expiration of individual tax cuts, the bill would eventually make many households worse off, according to the nonpartisan Congressional Budget Office and Joint Committee on Taxation. On average, households making under $30,000 would start seeing negative effects in 2019 and households making under $75,000 would become worse off in 2027.

Other GOP senators with potential concerns include Marco Rubio (R., Fla.), Lisa Murkowski (R., Alaska), Jerry Moran (R., Kan.) and John McCain (R., Ariz.).

Sen. Rand Paul (R., Ky.) said Monday morning that he would vote for the bill, even though he would prefer a larger tax cut.

“I’m not getting everything I want—far from it. But I’ve been immersed in this process,” Mr. Paul wrote on the Fox News website. “I’ve fought for and received major changes for the better—and I plan to vote for this bill as it stands right now.”

Mr. Trump tweeted Monday morning that there would be a few changes to help pass-through businesses and middle-income households. He is slated to meet with Finance Committee Republicans Monday afternoon.

The changes for households could include allowing a deduction for property taxes, said a person familiar with the discussions. Currently, taxpayers can claim an itemized deduction for state and local property taxes and for income or sales taxes, but the Senate proposal eliminates all of these breaks. Ms. Collins has said she wants at least some state-tax deductibility allowed.

The House bill repeals the income and sales tax breaks but won some votes from Republicans from high-tax states by preserving a $10,000 break for property taxes. One option in the Senate under consideration is to match—or even exceed—the House’s property-tax deduction, according to a person familiar with the discussions.

Lawmakers are also looking at changes flagged by business groups that have been poring over the legislation. The tax package went from concept to legislation in less than a month and tax lawyers and businesses are worried about unintended consequences.

“Companies are still running their models. And I don’t know if anybody knows right now if they’re going to be worse off,” said Catherine Schultz, vice president for tax policy at the National Foreign Trade Council. “Companies are obviously talking to staff and trying to fix some of the problems in the bill, but right now [lawmakers are] much more concerned about making sure they get their 50 votes.”

Write to Richard Rubin at richard.rubin@wsj.com and Siobhan Hughes at siobhan.hughes@wsj.com

https://www.wsj.com/articles/senators-seek-changes-to-tax-bill-as-busy-week-kicks-off-1511805833

Obama health mandate now target of GOP in big tax bil

November 15, 2017

The Associated Press

WASHINGTON (AP) — The Obama health care law’s requirement that Americans get insurance coverage is now pinned as a target of Republican lawmakers, as they look to end the individual mandate to help pay for deep cuts in their tax legislation.

Senate Republicans showed Tuesday they’re intent on scrapping the Affordable Care Act’s insurance mandate, and the idea was endorsed by scores of GOP lawmakers in the House.

Sen. Orrin Hatch, chairman of the Finance Committee, confirmed late Tuesday he was revising the bill to include repeal of the insurance mandate “to help provide additional relief to low- and middle-income families.”

The surprise renewal of the failed effort to eliminate the health care law’s mandate came a day after President Donald Trump renewed pressure on Republican lawmakers to include the repeal in their sweeping legislation to revamp the tax system. It carries high political stakes for Trump, who lacks a major legislative achievement after nearly 10 months in office.

The move by Republicans on the Senate Finance Committee upended the debate over the tax measure just as it was inching closer to passage following months of fine-tuning and compromise. It turned the debate into an angry partisan referendum on health care and President Barack Obama’s signature law, the Affordable Care Act.

House Speaker Paul Ryan joined a growing chorus of Washington Republicans calling upon Roy Moore to drop out of his embattled race for the U.S. Senate. Ryan also projected confidence about delivering on an overhaul of the nation’s tax code. (Nov. 14)

The Finance panel digs into a third day of work on the Senate tax bill on Wednesday. The completed House tax bill, pointed toward a vote in that chamber Thursday, does not currently include repeal of the health insurance mandate. Trump plans an in-person appeal to House Republicans before the vote.

Promoted as needed relief for the middle class, the House and Senate tax overhaul bills would deeply cut corporate rates, double the standard deduction used by most Americans and limit or repeal completely the federal deduction for state and local property, income and sales taxes. Republican leaders deem passage of the first major tax overhaul in 30 years as imperative for the GOP to preserve its majorities in next year’s elections.

Republican efforts to dismantle the health care law collapsed this past summer as moderate Republicans joined with Democrats in rejecting the repeal — a bitter disappointment for Trump, who lashed out at the Senate GOP for failing. Adding the repeal of the mandate to the tax measure would combine two of Trump’s legislative priorities.

Beyond Trump’s prodding, the repeal move was dictated by the Republicans’ need to find revenue sources for the massive tax-cut bill, which calls for steep reductions in the corporate tax rate and elimination of some popular tax breaks.

The “Obamacare” mandate requires most people to buy health insurance coverage or face a fine. Without being forced to get coverage, fewer people would sign up for Medicaid or buy federally subsidized private insurance. Eliminating the mandate in the tax legislation would save an estimated $338 billion over a decade, which could be used to help pay for the deep cuts.

The Congressional Budget Office has estimated that repealing the requirement that people buy health coverage would mean 4 million additional uninsured people by 2019 and 13 million more by 2027.

It “will cause millions to lose their health care,” Sen. Ron Wyden of Oregon, the senior Democrat on the Finance Committee.

Feeling ambushed without advance notice, minority Democrats warned that with fewer healthy people in the insurance risk pool, the price of premiums would rise.

“Rather than learning the lessons from their failure to repeal health care, Republicans are doubling down on the same partisan strategy that would throw our health care system into chaos,” said Senate Democratic leader Chuck Schumer. “If the American people weren’t already outraged by this bill, injecting health care into it will certainly do the trick.”

To win over moderate Senate Republicans to the tax legislation, the Senate may take up at the same time a bipartisan compromise to shore up health care subsidies, Sen. John Thune, R-S.D., indicated Tuesday. Thune is a member of the Finance panel.

Hatch’s revised version of the tax bill would double the child tax credit to $2,000 from the current $1,000 — a change that presidential daughter Ivanka Trump has pushed for. The credit would rise to $1,600 under the House bill.

Also, Hatch’s revision makes slight reductions in individual tax rates for three moderate income brackets, numbers three, four and five of a total seven. The rates are reduced from the original Senate bill and the current system. The new rates are 10, 12, 22.5, 25, 32.5, 35 and 38.5 percent. The House bill shrinks the current seven brackets to four: 12, 25, 35 and 39.6 percent.

___

Associated Press writers Kevin Freking, Andrew Taylor and Ricardo Alonso-Zaldivar in Washington contributed to this report.

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Senate GOP Adds Health-Care Twist to Tax Overhaul Plan

November 15, 2017

Republicans add provision repealing health-law insurance mandate

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Senate Majority Leader Mitch McConnell, R-Ky., and Sen. John Thune, R-S.D., at a news conference on Tuesday where they announced that the individual mandate to have health insurance would be repealed in the Senate GOP tax bill.   J. Scott Applewhite/AP

Senate Republicans attached a provision to their tax overhaul that would repeal the requirement that all Americans have health insurance, a new twist in the GOP lawmakers’ efforts to rewrite much of the U.S. tax code.

The insurance mandate is a centerpiece of the 2010 Affordable Care Act, also known as Obamacare. Repealing it is a long-sought goal of Republicans, who see it as onerous. Moreover, eliminating the mandate could free up federal tax revenue because it would mean fewer households buying insurance and thus fewer applying for federal health-care subsidies or for Medicaid.

Republicans plan to use the money freed up by repealing the mandate to direct tax cuts to middle-income households. They want to increase their proposed $1,650 child tax credit to $2,000 per child and lower the tax rates in three brackets, dropping the proposed 22.5%, 25% and 32.5% rates to 22%, 24% and 32%, respectively, according to the proposal, released Tuesday night by the Senate Finance Committee.

Those alterations, which the committee will debate Wednesday, will help Republicans show more tangible benefits to families, and the bigger child credit was a priority for some GOP senators.

Under the changes announced late Tuesday, almost all of the individual tax cuts and the tax cuts for pass-through businesses would expire at the end of 2025.

That would help Republicans follow the fast-track process they are using, which lets them pass a bill without needing Democratic votes but prevents them from adding to projected budget deficits after 2027. However it opens them to Democratic arguments that they are prioritizing corporations’ permanent cuts over individuals. And Democrats will likely be able to point to significant tax increases for individuals in 2027

The updated version of the tax bill also would make more businesses eligible for a new special deduction, double a deduction for teachers’ out-of-pocket expenses and create a tax credit for businesses that offer paid family leave.

Including the health-policy change adds a new layer of complexity to an already labyrinthine tax debate. Republicans have been speeding ahead, powered by a political imperative to reach a big economic-policy goal. So far, in their effort to overhaul the tax code, they have made progress in overcoming internal frictions over deficits, taxes on the wealthy, state and local deductions, child tax credits and business taxation. But they haven’t solved all those challenges yet, and Tuesday’s move adds health care to that list.

Senate Majority Leader Mitch McConnell said Tuesday that he was confident in the tax bill’s chances. He contrasted it with the effort to repeal the ACA outright earlier this year. “Every meeting I had on health care was like a trip to get a root canal,” he said at The Wall Street Journal’s CEO Council. “Nobody wanted to be there.”

A federal analysis showed repealing the mandate would increase by 13 million the number of people without health insurance by 2027 and increase premiums. It also complicates the economics of health coverage by shrinking the pool of healthy and younger people who are insured, making it harder to pay for those who end up with big health expenses. All that could spook moderate Republicans who balked at earlier attempts to repeal the ACA because it would raise the number of uninsured.

The repeal, though, would lower the federal deficit an estimated $318 billion over a decade. Moreover, Republican lawmakers have been pressed by President Donald Trump to knock down the mandate, a requirement that conservatives see as onerous and which the president could weaken through executive action even if GOP lawmakers don’t act.

Republican aides cautioned Tuesday that they couldn’t guarantee there were enough votes to pass a tax bill with the health-care provision attached. The Finance Committee aims to finish the bill this week, setting up a vote by the full Senate after Thanksgiving.

Democrats panned the move and pointed to Republicans’ insistence on cutting the corporate tax rate to 20%. “The tax bill is going to hit the American people with a health-care double whammy,” said Sen. Ron Wyden (D., Ore.), warning that millions of people would lose their health insurance or pay higher premiums.

House Republicans, who aim to pass their own version of a tax plan Thursday, began the day wary of moving too fast on taxes on their own. Among their worries was that Mr. Trump might criticize their effort, as he did during the health-care fight earlier this year. They also worried about whether Senate Republicans would be able to follow through and pass tax legislation, avoiding a repeat of the tensions that doomed their health-care bill earlier this year.

“We just want to know if we’re headed for the same rocks for being the first kid to go to the blackboard to try to spell the word,” said Rep. Mark Amodei (R., Nev.), who has told House Republican leaders that he is still undecided. “After the experience with health care, when we were first to go, it’s not that our product was perfect but it was like, you get absolutely shredded by the folks on the other side of the building, and even some of the president’s comments.”

Still, House leaders said they were confident they would limit defections and pass their own tax bill, which doesn’t address the individual mandate.

House Speaker Paul Ryan (R., Wis.) indicated Tuesday evening that the House would wait to see if the Senate can pass a tax bill that repeals the individual mandate.

“We didn’t want to complicate tax reform and make it harder than it otherwise would be,” Mr. Ryan said at a Fox News town-hall meeting on taxes Tuesday evening.

Differences between the House and Senate plan will need to be reconciled in a conference committee if both bills pass.

“I want to support a good tax reform bill in one form or the other here. So I think it’s important we keep the House bill moving,” said Rep. Doug LaMalfa (R., Calif.), who said the tougher vote will be on the final product of a House-Senate agreement. “That’s where the rubber meets the road.”

Other differences between the House and Senate linger. For example, the House bill preserves a $10,000 deduction for property taxes; the Senate bill would repeal that, along with deductions for state and local income and sales taxes. Republican lawmakers had been debating for weeks whether to attach the individual mandate repeal to the tax bill, which lowers corporate tax rates, removes deductions and repeals the alternative minimum tax.

GOP lawmakers said repealing the mandate would mean fast relief to people who don’t get subsidies on the individual market, who otherwise might have to pay the significant premium increases next year.

But the aftereffects could haunt Republicans, and they involve the same concerns that prevented the Senate from passing a health bill. Health analysts warn that knocking down the insurance requirement would roil the individual markets. Average premiums for people who buy private insurance would rise by about 10% in most years of the coming decade, according to an estimate by the nonpartisan Congressional Budget Office.

Republicans pitch it as a tax cut, saying the savings generated by the mandate’s repeal will go to lower taxes for middle-income households. “If we’re talking about doing the right thing for the middle class, we’re talking about doing the right thing for hardworking Americans, here’s a good place to start cutting their taxes,” said Sen. Tim Scott (R., S.C.).

Focus in the Senate will now turn to Republicans who may be hesitant to vote for a package that raises the number of people without health coverage.

GOP Sens. Susan Collins of Maine and John McCain of Arizona haven’t indicated they would oppose the tax bill over the individual mandate. Both voted against the final Senate effort to dismantle the ACA in late July, along with Sen. Lisa Murkowski (R., Alaska). “My concern is that if we combine the health-care issues with tax reform, we make it far more controversial,” Ms. Collins told reporters Tuesday.

Mr. McCain said he needed to evaluate repealing the individual mandate as part of the broader tax bill.

Write to Stephanie Armour at stephanie.armour@wsj.com and Richard Rubin at richard.rubin@wsj.com

 https://www.wsj.com/articles/senate-gop-adds-health-care-twist-to-tax-overhaul-plan-1510710204

House may vote on its bill as soon as Thursday; Senate continues hammering out the details

November 14, 2017
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Hank Greenberg on U.S. Tax Reform, Corporate Tax
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The Senate tax-writing committee continues hammering out the details of its tax cut proposal on Tuesday, while the House may vote on its bill as soon as Thursday. Here are the latest developments, updated throughout the day:

Byrd Rule Rattles Senate As House Nears Vote

The House’s chief tax writer says he’s confident its tax bill will pass, but a major challenge continues to loom over Senate Republicans — the Byrd Rule, an arcane measure that says the final bill can’t add to the federal deficit after its first decade in place if lawmakers want to pass it with a simple majority.

The Senate Finance Committee is set to start debating the GOP tax proposal, which is estimated to cost $217 billion in the 10th year, with more red ink in subsequent years. That means there would have to be significant changes to avoid long-term deficits. Orrin Hatch, the panel’s chairman, acknowledged on Monday there’s still work to do. He’s expected to release a modified chairman’s mark on Tuesday that may aim for better numbers.

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Orrin Hatch

But how the revised version would bridge the gap remains a mystery.

Even Hatch seems unsure: “I know what’s in it but they may change it on me,” he said after his committee recessed Monday evening.

Senator Susan Collins of Maine offered some ideas for changes late Monday. They included setting the corporate rate at 21 percent, not 20, and keeping the current top individual rate of 39.6 percent for married taxpayers filing jointly who earn $1 million or more. The Senate bill proposes cutting that rate to 38.5 percent. The proceeds from those adjustments could go to providing a refundable childcare tax credit or preserving property tax deductions, according to Collins, who cast a pivotal vote to block an Obamacare repeal bill earlier this year.

The Senate proposal would limit its revenue losses in part by delaying a cut to the corporate rate — to 20 percent from 35 percent — until 2019, a year later than the House has proposed. It would also fully repeal all state and local tax deductions. The House wants to retain a break for state and local property taxes, capped at $10,000.

Across the Capitol, House Republicans were upbeat Monday night. Matt Gaetz, a Florida Republican who previously criticized the secret drafting of the bill, praised the way House leaders had educated members about the legislation and said he expects it to pass this week.

“After the cataclysmic stumble on health care I think people really are looking for a way to get to yes on taxes,” Gaetz said in an interview.

The Republican whip team reported that the tally for the tax bill was in a good place on Monday night, according to two House members briefed on the vote counting who were not authorized to speak publicly. Conservatives are mostly on board, and the focus is now on convincing members from high-tax states that the compromise to preserve the deduction for state and local property taxes will be included in the final bill, the two Republicans said.

The House has an easier task though, since it isn’t bound by the Byrd restriction on long-term deficits. As far as Ways and Means Chairman Kevin Brady is concerned, the ball is in the Senate’s court to find a solution.

“I assume the Senate will address it in their process,” Brady told reporters Monday. “At the end of the day the final bill has to comply with those Byrd Rules.”

House and Senate tax writers have been more concerned with meeting the first requirement of the Byrd rule — that the bill stay within the amount allotted in Congress’s 2018 budget resolution: $1.5 trillion. Each version just squeaks by — the House tax bill is estimated to add $1.44 trillion to the deficit, while the Senate proposal would add $1.496 trillion.

“We really haven’t analyzed it in the second decade,” Brady said.

If the Senate is able to fix its Byrd problem and approves tax legislation, the House and Senate versions will have to be reconciled in a conference committee. So eventually, Brady will have to deal with the long-term deficit issue and make sure his members support the potentially painful compromises that would stem the bill’s red ink. — Sahil Kapur, Anna Edgerton, Erik Wasson and Steven T. Dennis

What to Watch on Tuesday:

  • The Senate Finance Committee will begin its markup at 9 a.m. Hatch is expected to introduce his modified chairman’s mark, which could include amendments that have strong support among committee members.
  • Potential amendments related to the treatment of carried interest, retirement savings, corporate integration and state and local tax deductions could be introduced.
  • House vote count results may emerge along with any minor revisions to the House tax bill. Brady said Monday afternoon he’s confident the chamber has enough Republican votes to pass its tax legislation this week.

Here’s What Happened on Monday:

  • Opening statements from Senate Finance committee members, including Senator Ron Wyden, the panel’s top Democrat, who blasted GOP leaders’ process of crafting the bill as a partisan “farce” and labeled their statements about its benefits — including higher wages — as “trickle-down fantasy math.”
  • President Donald Trump repeated his call for Congress to repeal the Obamacare law’s requirement that individuals purchase health insurance — and said the resulting savings could help offset a rate cut for top earners.
  • The Congressional Budget Office said the Senate bill would increase the federal deficit over 10 years by $1.7 trillion, including increased debt service but not any macroeconomic effects from the legislation.
  • A nonprofit group that spent more than $18 million to defeat Hillary Clinton in 2016 is turning its sights to Republican House members in high-tax states, including New York and New Jersey, saying it will be “counting on” them to support GOP tax legislation.
  • For a full account of the day, click here.

— With assistance by Sahil Kapur, Anna Edgerton, Erik Wasson, and Steven T. Dennis

https://www.bloomberg.com/news/articles/2017-11-14/byrd-rule-rattles-senate-as-house-nears-vote-tax-debate-update

The 30 Republicans Holding Up Tax Reform

September 14, 2017

The Freedom Caucus threatens to side with Democrats and block the GOP majority.

By Karl Rove
The Wall Street Journal
Sept. 13, 2017 6:53 p.m. ET

No matter how persuasive President Trump is, it’s unlikely he can round up enough Democrats to get 60 votes in the Senate for tax reform. That means Republicans will need to use the Senate’s reconciliation process, which avoids the filibuster, to pass their plan with 51 votes. But first the House and Senate must pass a budget resolution—and soon.

A budget resolution sets spending levels and authorizes congressional committees to prepare bills fulfilling the blueprint. With the reconciliation plan in mind, this year’s resolution would set the size of the tax reform and then instruct the House Ways and Means Committee and the Senate Finance Committee to flesh out the provisions.

Gaining agreement on a budget resolution is always tough. No more than a handful of lawmakers from the opposition party ever vote for the majority’s resolution. It helps that Republicans control both the House and Senate, but the GOP must still resolve its internal philosophical disagreements.

House Republicans tend to insist on resolutions that balance the budget within 10 years. This means resolutions that pledge to slow substantially the growth of entitlement spending. Such promises are rarely fulfilled. But putting them in the budget blueprint fuels Democratic ads claiming Republicans will throw grandma off the cliff and deprive poor children of free school lunches. Knowing this, Senate Republicans tend to want resolutions that reach balance after 10 years. Another GOP tension is between defense hawks, who want increased military spending, and deficit hawks, who want all spending restrained or cut.

Then there are nerdy but important technical arguments, starting with how the resolution’s spending baseline is calculated. Beginning with a baseline of “current law” means assuming that a tax break currently authorized for only a year or two will actually expire instead of being reauthorized. But Congress renews some tax breaks annually and probably will keep doing so through the next decade. To account for this, many in the GOP want to calculate the baseline under “current policy.”

It sounds technical, but it quickly becomes political. Democrats demand “current law” because a higher baseline would make tax reform appear to raise the deficit more than it actually would. On the other hand a lower baseline would give tax reform more wiggle room: One GOP budget expert tells me that “current policy” would provide, on paper, $450 billion that could be used to lower rates and make the tax code simpler and fairer.

Dynamic scoring is another geeky fight. A tax reform that generates economic growth will offset some of the government revenue lost from cutting rates. Republicans want their bill evaluated with dynamic scoring because it takes this effect into account and makes reform more attractive. Democrats oppose it for the same reason.

Still, given time and leadership—both on Capitol Hill and from the White House—Republicans could cobble together a budget resolution setting up a strong tax reform, which in turn would juice the economy and redeem the GOP in the midterms.

The biggest obstacle is the House Freedom Caucus. This group of just over 30 Republican congressmen has already slowed up the process by threatening to vote with Democrats against the GOP budget resolution unless they can see and approve, in advance, every major provision of the tax-reform bill. The Freedom Caucus tried in late July to block the House Budget Committee’s passage of a resolution unless the border-adjustment tax was taken off the table—which it then was. Now the Freedom Caucus’s members say they’ll flake on the budget resolution if tax reform includes full, immediate expensing of business investment. But if that’s agreed to, they’ll have more demands.

These lawmakers say they want Congress to operate in “regular order,” with committees grinding away to write legislation instead of leadership handing it down. This is hypocritical bunk. What they want is for their caucus to dictate the details of tax bills to the House Ways and Means Committee, the Senate Finance Committee and the Republican majorities on both sides of Capitol Hill. Their approach is to make demands while threatening to join Nancy Pelosi in opposing the budget resolution unless they get their way.

If the Freedom Caucus acts on its threat, the budget resolution could be voted down, making tax reform impossible. No doubt, following their M.O., the group’s members would then blame the GOP leadership. Even if the resolution passes, the Freedom Caucus’s shenanigans may delay tax reform until 2018. These lawmakers are demonstrating once again that the freedom they most prize is freedom from the responsibility of governing.

Mr. Rove helped organize the political-action committee American Crossroads and is the author of “The Triumph of William McKinley ” (Simon & Schuster, 2015).

Appeared in the September 14, 2017, print edition.

https://www.wsj.com/articles/the-30-republicans-holding-up-tax-reform-1505343197

Mnuchin Defends Investments, Qualifications in Senate Hearing — Treasury nominee struggles to explain his ethical lapse

January 20, 2017

Trump’s pick for Treasury faces scrutiny of Democrats, hews to GOP line on some issues

Image may contain: 2 people, eyeglasses

Donald Trump’s nominee for Treasury secretary, Steven Mnuchin, took questions on how a Trump administration would, or would not, follow precedent in discussing monetary policy. Photo: AP

Updated Jan. 19, 2017 11:52 p.m. ET

WASHINGTON—Donald Trump’s pick for Treasury secretary, Steven Mnuchin, brushed aside a drumbeat of criticism from Democrats over his qualifications and investment holdings Thursday and sought to reassure lawmakers on a range of issues he would face as part of the Trump administration.

Mr. Mnuchin adopted several positions that sounded closer to the outgoing administration, including urging Congress to quickly raise the nation’s borrowing limit after a current suspension of the ceiling expires in March. He reaffirmed the..

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Trump’s Treasury secretary pick claims the Obama administration unemployment rate is ‘not real’ — “The average American worker has gone nowhere.”

January 20, 2017

“The average American worker has gone nowhere,” Mnuchin said in his confirmation hearing.

Treasury Secretary-designate Steven Mnuchin testifies on Capitol Hill in Washington, Thursday, Jan. 19, 2017, at his confirmation hearing before the Senate Finance Committee. CREDIT: AP Photo/J. Scott Applewhite

Steve Mnuchin, Trump’s nominee for Treasury Secretary, claimed during his confirmation hearing on Thursday that the unemployment rate is “not real” and that “the average American worker has gone nowhere.”

In response to a line of questioning by Sen. Maria Cantwell (D-WA) about what he would do to protect voters from another recession, Mnuchin claimed that he has traveled with the president and understands why Trump was elected.

“The unemployment rate is not real,” he said. “The average American worker has gone nowhere, and president-elect is committed, as am I, as his economic adviser, to work for the American people and grow the American economy so that the average American worker does better.”

On the campaign trail, Trump also repeatedly claimed that the unemployment rate is a “phony number,” and that the real rate could actually be close to 42 percent.

But Mnuchin, a former Goldman Sachs banker and the co-founder of a major lending bank, should know better. Calculated by the Bureau of Labor Statistics (BLS), the unemployment rate is the percentage of the total labor force that is unemployed but actively seeking employment. The number is a critical indicator of how the economy is doing and is widely used by economists. The number is respected by both Democrats and Republicans as a valid indicator of job growth. The BLS has calculated the rate the same way since the 1940s, and its methods do not change from one administration to the next.

The rate has also fallen by more than one-third since President Obama took office, dropping last month to just 4.6 percent — the lowest level since August 2007.

Despite the (real) numbers, a recent poll found that 53 percent of Republicans believe that the unemployment rate has risen under Obama. More than a third of all Americans think its worse now than when Obama took office.

Some believe that there’s a better measure to track unemployment. That statistic, called the U-6, tracks everyone who is out of work, people not looking but who want work, and those unable to find full-time employment. That number is higher — currently it hovers over 9 percent. But Mnuchin made no mention of this statistic being a better indicator of job growth, and it’s not clear he would give any credence to any labor statistic as Treasury Secretary.

https://thinkprogress.org/mnuchin-unemployment-rate-a9ad16fd3b7b#.syrpr0dbr

Related:

Mnuchin Defends Investments, Qualifications in Senate Hearing — “I would love to work with the IRS to close these tax issues”

January 20, 2017

Trump’s pick for Treasury faces scrutiny of Democrats, hews to GOP line on some issues

Donald Trump’s nominee for Treasury secretary, Steven Mnuchin, took questions on how a Trump administration would, or would not, follow precedent in discussing monetary policy.

Updated Jan. 19, 2017 11:52 p.m. ET

WASHINGTON—Donald Trump’s pick for Treasury secretary, Steven Mnuchin, brushed aside a drumbeat of criticism from Democrats over his qualifications and investment holdings Thursday and sought to reassure lawmakers on a range of issues he would face as part of the Trump administration.

Mr. Mnuchin adopted several positions that sounded closer to the outgoing administration, including urging Congress to quickly raise the nation’s borrowing limit after a current suspension of the ceiling expires in March. He reaffirmed the…

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IRS ‘Delinquent’ in Unfair Scrutiny of Conservative Groups — Senate Report

August 6, 2015

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Republicans and Democrats disagree on whether there was political motivation

Former IRS official Lois Lerner on Capitol Hill in March 2014 during a House committee hearing.
Former IRS official Lois Lerner on Capitol Hill in March 2014 during a House committee hearing. PHOTO: LAUREN VICTORIA BURKE/ASSOCIATED PRESS