Republicans ready tax-redo measure for Senate debut

House lawmakers aim for panel’s approval of their legislation today

Rep. Richard Neal (right), D-Mass., the ranking member of the House Ways and Means Committee, discusses tax measures Wednesday. Committee chairman Rep. Kevin Brady (left), R-Texas, said last-minute changes in the measure likely will be made to meet deficit targets. Neal said Democrats would continue to offer amendments “till the last dog barks.”
Rep. Richard Neal (right), D-Mass., the ranking member of the House Ways and Means Committee, discusses tax measures Wednesday. Committee chairman Rep. Kevin Brady (left), R-Texas, said last-minute changes in the measure likely will be made to meet deficit targets. Neal said Democrats would continue to offer amendments “till the last dog barks.”

WASHINGTON -- Senate GOP tax writers on Wednesday put the finishing touches on their tax-overhaul bill while administration officials met privately with Republican senators.

"We're excited, everything looks good," Treasury Secretary Steve Mnuchin told reporters after he and chief White House economic adviser Gary Cohn met with Republicans on the Senate Finance Committee at the Capitol late Wednesday.

Still, some of the legislation's most basic contours seemed in flux only a day before committee Chairman Orrin Hatch, R-Utah, planned to unveil it.

As leaders hunted for ways to pay for their tax cuts, Sen. David Perdue, R-Ga., said the measure would eliminate the deduction people can take for state and local property, income and sales taxes. The House version would retain the deduction only for property taxes and cap that at $10,000, a provision that has drawn opposition from GOP lawmakers from states with high local taxes such as New York and New Jersey.

Perdue said the Senate plan would compress the current seven personal income tax brackets down to four. On Tuesday, two Republicans had said the bill would retain the seven brackets but cautioned that changes were possible.

Hatch's plan was likely to include a one-year delay in its reduction in the corporate tax rate, which will be permanent, said a GOP aide who spoke on condition of anonymity to discuss internal deliberations. Shrinking that rate to 20 percent from its current 35 percent has been a chief goal of President Donald Trump and the business community, but senators were considering delaying that reduction as a way of containing the bill's costs.

The tax bill must add to the federal deficit by no more than $1.5 trillion over the next decade. If Republicans don't do that, the measure will be vulnerable to a bill-killing Senate filibuster by Democrats that GOP senators lack the votes to block.

Across the street, the House Ways and Means Committee completed a third day of debate on the nearly $6 trillion legislation, with the Republican-led panel wading through dozens of amendments and rejecting Democrats' efforts to revise the bill.

Republican leaders want the panel to approve the bill today. Their goal is for Congress to send a measure to Trump by Christmas, which they hope would protect their congressional majorities in next year's elections.

A preliminary estimate by Congress' nonpartisan Joint Committee on Taxation said the House measure would add $74 billion more to 10-year deficits than the $1.5 trillion target allows.

Ways and Means Chairman Kevin Brady, R-Texas, plans to make last-minute changes in the measure before final passage, presumably to meet the target and nail down GOP votes so the House can approve the legislation soon. Democrats are expected to uniformly oppose the legislation.

The committee voted along party lines against a battery of Democratic proposals to restore to the bill tax benefits to student borrowers, people with significant medical expenses, homeowners and teachers.

The proposed elimination of the deduction for medical expenses not covered by insurance is especially contentious.

The deduction has helped offset costs of such things as nursing-home care, laser eye surgery and out-of-state travel for a second opinion on a rare cancer.

Eliminating it "is a direct assault," said Rep. John Larson, D-Conn., the failed amendment's sponsor. "This is devastating to individual families."

Rep. Richard Neal, D-Mass., the ranking Democrat on the panel, said his party would continue offering amendments Wednesday "till the last dog barks."

House Speaker Paul Ryan, meanwhile, said the Republican drubbing in Tuesday night's elections "just puts more pressure on making sure we follow through" on the party's drive to overhaul the tax code.

Ryan, R-Wis., spoke after Republicans lost gubernatorial races in Virginia and New Jersey by large margins in off-year elections.

"It doesn't change my reading of the current moment," Ryan said of the elections during a morning event hosted by the Washington Examiner. "It just emphasizes my reading of the current moment, which is: We have a promise to keep, and we have to get on with keeping our promise."

"I fundamentally believe when we deliver on comprehensive tax reform and tax relief ... I think that's going to bear fruit politically, but most importantly it's going to help people," he added.

Hatch said the election losses could shape the tax bill going forward. "I mean, it could, because the elections went against the Republicans," Hatch said.

Asked if he was feeling pressure to tilt the tax plan more toward the middle class, Hatch said, "I think we've been moving that way anyway."

The initial version of the House tax bill delivered only 21 percent of its benefits to individuals, including the middle class, according to an analysis by the nonpartisan Joint Committee on Taxation. Four-fifths of the bill's aggregate tax cut benefited corporations and business owners with family earnings of more than $260,000 a year, as well as wealthy individuals who would no longer be subject to the federal estate tax.

Republicans argue that the business tax cuts will drive economic growth, adding jobs and pushing up wages, thus creating benefits for Americans at large. But those arguments are based on speculative analyses that congressional scorekeepers have not endorsed.

Democrats on Wednesday pounced on the election results, warning of a middle-class backlash that would only grow if Republicans continued their tax push.

"It should be a giant stop sign for the tax bill," Senate Minority Leader Charles Schumer, D-N.Y., told reporters. "Want to pass this tax bill? Want to hurt the suburbs? Make our day."

Neal said the elections' outcome "casts a shadow" over the GOP tax bill that the party will be hard-pressed to escape.

"You can't say this is middle-class tax relief and then say the priority is to repeal the estate tax, the priority is to repeal [the alternative minimum tax], the priority is to take away student interest deductions," he said. "Those resonate with middle-class people."

The tax rewrite effort has assumed even greater significance for the GOP after the party failed to repeal President Barack Obama's health care law. Republicans have discussed repealing the mandate in their tax legislation to raise more money to pay for tax cuts.

But the nonpartisan Congressional Budget Office lowered its estimate Wednesday for how much money repealing the so-called individual mandate would save from $416 billion over a decade to $338 billion. Repeal would save money because, without being forced to get coverage, fewer people would sign up for Medicaid or buy federally subsidized private insurance.

Information for this article was contributed by Marcy Gordon, Erica Werner, Andrew Taylor and Alan Fram of The Associated Press and by Mike DeBonis of The Washington Post.


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