WASHINGTON ― Senate Republicans made significant progress on their tax proposal Tuesday, with the Budget Committee advancing it to the House floor and senators coming close to agreements on a debt trigger, the individual health care mandate repeal and complicated business tax provisions that some Republicans think are too restrictive.
President Donald Trump came to a Senate GOP lunch on Tuesday, and while Trump didn’t exactly cut any deals himself, he apparently said he would sign a bipartisan agreement on Obamacare Cost Sharing Reductions ― the so-called Alexander-Murray deal worked out between Lamar Alexander (R-Tenn.) and Patty Murray (D-Wash.) ― as well as a bill providing $2.25 billion a year to states to subsidize the costs of individuals who require the most medical attention.
Sen. Susan Collins (R-Maine) sounded substantially less pessimistic about the tax bill Tuesday after Trump’s commitment, telling reporters that her first preference was still to not include an individual mandate repeal in the tax proposal but that if it were included, she was happy that Trump at least said he would support the Alexander-Murray deal and her subsidy bill with Sen. Bill Nelson (D-Fla.).
“I’m encouraged by the response to my proposals on property tax deduction and mitigating the impact of the individual mandate repeal,” Collins said.
(Collins has also expressed opposition to the elimination of the deduction for state and local taxes, offering proposals that would at least let taxpayers write off some of what they pay in property taxes.)
Although she has never come out against the tax bill, Collins has looked like one of the toughest votes to get in the Senate, especially if Republicans really wanted to repeal the Affordable Care Act’s individual mandate, which requires those who don’t get health insurance to pay a penalty. But with Trump telling Collins during the Tuesday lunch that he would support those other pieces of legislation, Collins now seems gettable, and her ally in keeping the individual mandate, Sen. Lisa Murkowski (R-Alaska), has already indicated that she could support the bill.
One of the other toughest votes during the tax debate, Sen. Bob Corker (R-Tenn.), also appears to have softened over the last 24 hours. Corker told reporters Monday night that he “very possibly” could vote against the budget for tax reform in committee on Tuesday. But after working with leadership for a “trigger” that would claw back tax cuts if certain revenue targets weren’t being hit, Corker supported the bill, with the proposal advancing out of the panel on a party-line vote.
“We’ve got an outline of an agreement at every level that matters in the Senate,” Corker told reporters on Tuesday.
While Corker was careful to note there wasn’t yet legislative language for the trigger, he said he and other Republican senators concerned about how much debt the tax bill could produce had a commitment that puts them “in a pretty good place.”
Sen. Ron Johnson (R-Wis.), another member of the Budget Committee who threatened to vote no in committee but ended up voting yes, also seems to have come around, at least somewhat.
The Senate bill would allow businesses known as “pass-throughs” ― because their earnings are taxed when they pass through to their owners’ individual tax returns ― to deduct 17.4 percent of their qualified business income from their overall income, reducing their tax bill. The bill also imposes complicated restrictions on the deduction for pass-through owners earning more than $500,000 annually.
Johnson and Sen. Steve Daines (R-Mont.) have said they oppose the Senate tax bill because it wouldn’t benefit small businesses as much as it would large corporations. Specifically, their complaint is that, while corporations would get a big tax cut, pass-through businesses would still be subject to the higher individual income tax rates.
One possible change under discussion would be to increase the deduction to 20 percent of qualified business income, though Daines and Johnson have been cagey about whether that would win them over.
“I want to see that moved up,” Daines told reporters on Tuesday morning, referring to the value of the deduction. “That would be significant progress.”
Trump reportedly told Johnson during Tuesday’s lunch that he ought to withdraw his objection to the Senate bill now and instead try to amend the measure to his liking on the Senate floor ― or perhaps wait until there’s a conference with the House.
Spokespeople for Johnson didn’t respond to a request for comment, but Sen. Richard Shelby (R-Ala.) suggested that Trump said they could work out Johnson’s concerns.
“I believe we gonna get us a tax bill,” Shelby said.
Senators are speeding to a potential floor vote on the tax proposal by the end of this week, setting up either a quick conference between the House and Senate ― either officially or unofficially ― or for the House to just take the Senate bill and pass it. If, as expected, all Democrats vote against the bill, Republicans can lose only two votes (with Vice President Mike Pence breaking a 50-50 tie).
Again, there are a number of outstanding concerns, but the overall direction of negotiations suggests this is a bill that will become law. Republicans have thus far overcome just about all their reservations in the name of a legislative victory, and even though it could be very tricky ― read: expensive ― to open up the pass-through provisions so that more small businesses pay less, the Republicans raising these concerns aren’t usually the ones who would stymie a GOP win.
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