Senate tax bill has votes to pass

Senate Republicans have locked down the votes they need to pass their tax bill. The necessary votes were secured when Sens. Jeff Flake, Ron Johnson, and Susan Collins announced their support. Reportedly, only Sen. Bob Corker is a “no.”

This means there are 51 votes for the measure. Mike Pence won’t have to break a tie.

It’s important to remember that this tax bill is tax reform, not a tax cut per se for individuals and families. The corporate tax rate is cut significantly (from its outrageous current level of 35 percent to 20 percent), which should mean higher wages. In addition, tax rates for families and individuals are cut until 2025.

However, because the bill affects some important tax deductions, there will be losers and winners among ordinary taxpayers. Of course, if the tax bill stimulates enough growth, most losers should turn into winners.

It is the reformist nature of the legislation that helped persuade Susan Collins to support it. She said:

I don’t think there is a single American who thinks that our current tax code is fair, simple, or promotes economic growth. We need a tax system that will boost the economy, help the middle class, and encourage small businesses to grow and create jobs. If we stimulate the economy through tax reform, we can significantly increase federal revenues while boosting Americans’ take-home pay.

However, Collins demanded and received concessions in exchange for her support. The Senate tax bill will include her SALT amendment which allows taxpayers to deduct up to $10,000 for state and local property taxes, as well as a similar amendment on deducting property taxes.

The Senate bill also will include Collins’ amendment to reduce the threshold for deducting medical expenses, which helps people with high medical costs, particularly seniors and people with chronic conditions. Collins says that 8.8 million Americans use this deduction, half with incomes of $50,000 or less. And Collins received assurances that no reduction in Medicare will be triggered by tax bill.

Finally, Collins secured a commitment from Majority Leader McConnell to support the Alexander-Murray bill. It would prop up Obamacare to some degree by funding a key health insurance subsidy program and providing states flexibility to skirt some requirements of the health care law.

Some of the concessions to Collins seem like good policy, others seem dubious. In any case, I would say Collins got a lot in exchange for a vote that, as things turned out, the GOP apparently doesn’t need.

The Senate bill differs materially from the version of tax reform passed by the House. Ironing out the differences in conference and formulating a compromise that can pass in both chambers may prove difficult. For example, some of Sen. Collins’ provisions may not sit well with certain House conservatives. Fortunately, as noted, Collins’ is the 51st Senate vote.

It’s no scoop that Republican lawmakers feel intense pressure to pass tax reform and that the Trump administration likewise feels intense pressure to see it pass. That’s why both chambers have passed a version, and why the difficulties of reconciling the two versions likely will be overcome.

Responses

Books to read from Power Line