[NFBMT] The New York Times: McConnell Says Republicans Have the Votes to Pass the Tax Bill

Fri Dec 1 23:32:46 UTC 2017

The New York Times

Politics

McConnell Says Republicans Have the Votes to Pass the Tax Bill

By THE NEW YORK TIMESUPDATED 2:52 PM

Right Now Senator Susan Collins said she will vote yes on the tax bill.
Senator Bob Corker says he cannot support current bill.

. Senator Mitch McConnell, the majority leader, said "we have the votes" and
the Senate will begin voting later today.

. Senator Susan Collins of Maine said she has secured the changes she needs
to vote yes. For example, the bill will now include a $10,000 deduction for
state and local property taxes.

. Three previous Republican holdouts - Senators Jeff Flake of Arizona, Steve
Daines of Montana and Ron Johnson of Wisconsin - threw their support behind
the bill.

An effort by Senator Bob Corker of Tennessee to include future tax increases
to offset the deficit impact of the bill was rejected by Senate leadership,
prompting Mr. Corker to say he is unable to support the legislation.

. Lawmakers are now considering reinstating a modified version of the
alternative minimum tax on individuals and on corporations.

Republicans close to passing Senate bill.

The Senate is on the verge of passing the Republicans' sweeping tax overhaul
with several holdouts now throwing their support behind the bill.

Ms. Collins, who was the last big holdout, said she would support the bill
after changes she wanted were made to the legislation.

"Having secured these key improvements in the bill, as well as the
commitments to legislation to help lower health insurance premiums, I will
cast my vote in support of the Senate tax reform bill," she said. "As
revised, this bill will provide much-needed tax relief and simplification for
lower- and middle-income families, while spurring the creation of good jobs
and greater economic growth."

Party leaders also picked up the votes of three other holdouts: Mr. Flake,
Mr. Daines and Mr. Johnson.

Mr. McConnell and Senator John Cornyn, the No. 2 Senate Republican, said on
Friday morning that Republicans had the 50 votes they need to pass the tax
bill.

Republicans appeared increasingly confident as they milled into the Senate's
ornate Strom Thurmond Room to hash out the remaining details of a tax bill
that has been a moving target.

Among the changes Ms. Collins secured was adding in a $10,000 property tax
deduction into the Senate bill. Ms. Collins tweeted that she was "delighted"
with the move.

Mr. Corker had pushed to scale back the tax cuts in the Senate bill in the
wake of a report from the congressional Joint Committee on Taxation that
projected the bill would add $1 trillion to deficits over the course of a
decade, even after accounting for economic growth. On Thursday night,
Republicans were discussing several possibilities for changing the bill to
address deficit concerns, including gradually raising the corporate tax rate
in later years.

But other Republicans resisted the idea of raising taxes, and on Friday, that
idea was off the table.

"This is yet another tough vote. I am disappointed. I wanted to get to yes.
But at the end of the day, I am not able to cast aside my fiscal concerns and
vote for legislation that I believe, based on the information I currently
have, could deepen the debt burden on future generations," Mr. Corker said in
a statement.

Mr. Trump sounded optimistic on Friday morning, in a tweet taunting Democrats
over the bill's prospects.

Party leaders gained four more votes on Friday.

Mr. Daines and Mr. Johnson had objected to the bill because of how it treated
pass-through businesses, whose profits are distributed to owners and taxed at
individual rates.

The Senate tax bill will now allow pass through owners to deduct 23 percent
of their business income as a way of lowering their taxes, up from 17.4
percent in the original Senate bill.

"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," Mr. Daines said
in a statement on Friday morning.

The Senate tax bill has been marketed by Republicans as a tax cut for the
middle class. How would people in your income group fare? 

Mr. Johnson said in a statement he also supports the bill.

Mr. Flake, in a statement, said he would support the tax bill after getting
changes to a budget "gimmick" and a commitment that Senate leaders and the
Trump administration would work with him on a legislative solution on
Deferred Action for Childhood Arrivals.

Republicans are coming up with ways to pay for the changes.

On Friday, Republicans rejected the idea of putting in place tax increases
that would take effect some years from now, a step that would soften the
deficit effects of the legislation.

"Larding the bill up with new tax increases would have been going the wrong
direction," said Senator Ted Cruz, Republican of Texas.

But lawmakers still need to find ways to pay for the changes being made and
congressional aides said it will likely be a combination of things including:

. Retaining the alternative minimum tax for corporations, which would raise
$40 billion over a decade.

. Retaining a modified version of the individual AMT, which would raise $133
billion over a decade.

. Slightly increasing the tax rate on offshore assets under the "deemed
repatriation" provision, which would raise $97 billion over a decade.

Another study says tax bill won't pay for itself.

The independent Tax Policy Center said on Friday that the Senate tax bill
would add $1.2 trillion to federal deficits over 10 years, even after
accounting for increased economic growth. That deficit estimate was slightly
higher than the congressional Joint Committee on Taxation projected on
Thursday.

The so-called dynamic score from the center found that the bill, as approved
in the Finance Committee, would increase economic growth by 0.7 percent next
year, but that its growth boost would fade over a decade, as deficits and
federal debt increase. The center said those benefits would be larger if the
economy was struggling, and not operating under low unemployment: "Because
the economy is currently near full employment, the impact of increased demand
on output would be smaller and diminish more quickly than it would if the
economy were in recession."

Republican senators have criticized the center's previous findings and
largely dismissed the Joint Committee's analysis on Thursday. They say they
expect much larger growth effects than the analyses have found.

The independent Tax Foundation, which typically finds higher growth effects
from tax cuts, has not yet released an analysis of the bill after it
underwent significant amendments in committee.

A last-minute scramble to shore up support from wavering Republican senators
injected significant changes into the Senate tax bill.

The overhaul will still cut taxes on individuals and businesses, but the
changes will reduce some benefits while sweetening others. Some of the
provisions lawmakers wanted will cost additional money, prompting the need to
find offsets.

Here's a look at the main changes that are expected to be included in the
Senate's revised bill to be voted on later today.

A version of the alternative minimum tax returns.

Senate lawmakers, in search of additional revenue, are expected not to
entirely eliminate the alternative minimum tax, or A.M.T., on individuals as
originally proposed.

The A.M.T. was created to limit the amount of deductions available to the
richest Americans. Over the years, though, inflation has eaten away at its
effectiveness - as has the exclusion of interest and dividend income, which
insulates the richest Americans.

But it brings in a lot of revenue - as much as $1 trillion over the next
decade - so lawmakers are now planning to reduce, rather than repeal, the
tax. The Senate bill will increase the individual exemption amounts that
taxpayers using the A.M.T. are entitled to and will increase the taxable
income level at which those exemption amounts begin to phase out. Both moves
will provide some relief to those whose income and use of deductions requires
them to use the A.M.T., but it is far different from the House bill, which
eliminates the tax as part of its tax code "simplification" effort.

About 30 percent of households earning $200,000 to $500,000 in 2016 are being
hit by the alternative minimum tax, as are 63 percent of those earning
$500,000 to $1 million, according to calculations from the nonpartisan Tax
Policy Center in Washington. But only 20 percent of households with incomes
greater than $1 million are subject to the A.M.T.

The Senate bill also retains the corporate A.M.T., which was slated for
elimination in both the Senate and House bill. Together, the changes are
expected to raise about $173 billion over the next decade.

State and local tax deductions are back, in a limited way.

The Senate bill is expected to allow taxpayers to deduct up to $10,000 in
state and local property taxes paid, a provision in unison with the House
bill.

The original Senate bill called for elimination of the state and local tax
deduction, which is primarily used in high-tax, Democrat-leaning states. But
Senator Susan Collins, Republican of Maine, insisted on including the limited
property tax deduction, which will cost about $148 billion over a decade.
That could ease one potential area of contention with the House bill.

Pass-through businesses score a victory.

The Senate bill will sweeten the tax deduction for owners of businesses that
are organized as pass-throughs, meaning the business income is taxed at the
individual owner's tax rate.

The Senate bill will now allow those pass-through owners to deduct 23 percent
of their business income, up from 17.4 percent in the original bill. That is
above the 20 percent deduction in the House bill and a significant win for
Senator Ron Johnson, Republican of Wisconsin, whose family-owned business is
operated as a pass-through.

The change will cost the United States government $114 billion over a decade.

The threshold for claiming medical expense deductions is reduced.

Another change pushed by Ms. Collins will lower the threshold for Americans
to deduct medical expenses. Under current law, individuals can deduct
out-of-pocket medical expenses that exceed 10 percent of adjusted gross
income. The revised bill will lower that to 7.5 percent of adjusted gross
income, a change that will help older Americans and those with lower incomes.

However, the House bill eliminated the deduction altogether, so that will be
one area of potential contention when the two chambers try to reconcile their
versions. The cost of that change is unclear, as of now.

Offshore profits face a higher tax rate.

The Senate bill increases the tax rate that companies will have to pay on
foreign corporate profits. The "deemed repatriation" provision in the Senate
will now subject untaxed foreign corporate profits to immediate taxation at a
rate of 14 percent for cash holdings and 7 percent for noncash holdings. That
is up from the original proposal of 10 percent and 5 percent and in line with
the House version.

The change is expected to bring in an additional $97 billion over a decade.

WASHINGTON - The Senate is on the cusp of passing its sweeping tax overhaul,
with Republican leaders saying on Friday that they have enough votes to pass
the bill along party lines after last-minute changes brought wavering
senators on board.

Senator Mitch McConnell of Kentucky, the majority leader, told reporters that
"we have the votes" and that the Senate would vote later in the day on a bill
whose final contents were still not publicly known.

Republican leaders said they have agreed to a host of tweaks, including a
provision that would allow taxpayers to deduct up to $10,000 in state and
local property taxes paid, a change that had been pushed by Senator Susan
Collins of Maine. Lawmakers also plan to sweeten the tax break for companies
organized as pass-through entities, a provision needed to win the support of
Senators Ron Johnson of Wisconsin and Steve Daines of Montana.

And, in a bid to get Senator Jeff Flake of Arizona on board, leaders agreed
to work on providing "fair and permanent protections" for the beneficiaries
of an Obama-era effort that protects young undocumented immigrants from
deportation, Deferred Action for Childhood Arrivals, known as DACA, Mr. Flake
said.

"There are no iron-clad commitments - at this date we're going to have a bill
- but I am confident," Mr. Flake said. "I've always been convinced on DACA
that the president's instincts are better than the advice he's getting."

Mr. Flake, an outspoken critic of Mr. Trump, said he had spoken with Vice
President Mike Pence about the issue. "We had a long conversation last night
and today, and he committed to start working with me on this," Mr. Flake
said.

Mr. Flake also said he had won changes in a provision, which expires after
five years, to allow companies to immediately deduct new investment expenses,
which he called a "gimmick."

The changes did not appear to include anything to assuage Senator Bob Corker
of Tennessee, whose concerns over the bill's effect on the federal budget
deficit created last-minute complications for Republican leaders on Thursday.
Mr. Flake had shared those concerns, but on Friday, after winning the DACA
pledge and the change in investment expensing, he said, "I am pleased to
announce I will vote in support the tax reform bill."

Mr. Corker had pushed to scale back the tax cuts in the wake of a report from
the congressional Joint Committee on Taxation that projected the bill would
add $1 trillion to deficits over the course of a decade, even after
accounting for economic growth.

Republicans discussed multiple possibilities for changing the bill to address
the deficit concerns, including gradually raising the corporate tax rate in
later years. But other Republicans did not want to reduce the $1.4 trillion
tax cut package.

On Friday, it was clear that Mr. Corker had lost out to colleagues with
rosier views of how the legislation would affect the economy. Senator John
Cornyn of Texas, the No. 2 Senate Republican, said Mr. Corker "obviously has
a point of view, which we all respect.

"But we just think this is a much stronger pro-growth tax reform plan and
will produce economic growth that will more than pay for the bill," Mr.
Cornyn said. "He's not so sure."

Mr. Daines and Mr. Johnson won a big concession when leaders agreed to allow
pass-through owners to deduct 23 percent of their business income, up from
17.4 percent in the original bill.

"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," Mr. Daines said
in a statement.

Mr. Johnson now supports the Senate bill as well.

"I wanted more," he said on Friday, "but I'm a reasonable human being."

Mr. Johnson had helped give a scare to Republican leaders just the night
before, as he, Mr. Corker and Mr. Flake withheld their votes as Republicans
were trying to kill a Democratic motion to relegate the bill back to a Senate
panel.

"Senator Corker called me and said, 'Why shouldn't we vote for that one?' "
Mr. Johnson recalled on Friday.

"There's always parliamentary maneuvers, right?" he said. "So we didn't
vote."

Recounting how the vote played out, Mr. Johnson said, "I was just kind of
biding my time." Eventually, he said, a Republican colleague, Rob Portman of
Ohio, came over to see what could be done.

The deal to sweeten the tax break for pass-through businesses came together
later that night, as Mr. Johnson, Mr. Daines and Senator Lindsey Graham of
South Carolina met with Mr. Cornyn in his Capitol office to make a case to
Senate leadership.

"There's a lot of competing interests," Mr. Johnson said, likening the bill
to a Rubik's Cube.

"I guess they put that Rubik's Cube together," he added.

Ms. Collins also won a fight over the elimination of the deduction for state
and local property taxes paid, securing the addition of a provision allowing
up to $10,000 in property taxes to be deducted. She also said in a tweet that
Senate leaders had agreed to expand the medical expense deduction so that
lower-income individuals could take advantage of the tax break.

However, Ms. Collins has yet to publicly support the bill; she said she would
announce a decision on her vote in the afternoon.

Democrats warned on Friday that Republicans were making a political mistake
with a bill that would increase taxes on some middle-class families.

"It'll be a dramatic turning point in a downward spiral for the Republicans,"
Senator Chuck Schumer of New York, the Democratic leader, said.

Joy Breslauer, President

National Federation of the Blind of Montana 

Web Site: http://www.nfbofmt.org <http://www.nfbofmt.org/> 

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