Republican tax writers in the House and Senate scoured the U.S. tax code Thursday and shook the couch cushions for loose change, as one member put it, in an all-day struggle to find ways to pay for the deep tax cuts their leaders and President Donald Trump have promised.
By day’s end, the House Ways and Means Committee had hammered together a bill and sent it toward the House floor for a vote promised next week, while the Senate Finance Committee revealed a proposal it intends to mark up on Monday.
But there’s an elephant in the room. Both plans contain nearly $1.5 trillion in red ink in the first 10 years. Unless they eliminate the red ink beyond that -- a tall order that would require major changes -- the legislation will be subject to a 60-vote threshold under Senate rules, which could doom it to failure. An alternative is to sunset some of the provisions after a decade, but congressional leaders don’t want that.
As written, the Senate proposal “blows a massive hole in the debt,” said Maya MacGuineas, president of the nonpartisan Committee for a Responsible Federal Budget, in a Twitter message Thursday night.
A GOP aide to the Finance panel said everything in the proposal that Senate Finance Chairman Orrin Hatch released Thursday is designed to be permanent -- and that any issues related to deficit effects will be fixed. The aide didn’t specify how. The committee is scheduled to begin marking up the bill on Monday, Hatch said.
Compensation Plans
Hatch’s plan seeks to shore up revenue by departing from the House bill in a number of ways -- including its proposal to fully repeal state and local tax deductions that benefit individuals in high-tax states. That measure will alienate GOP House members in New York, New Jersey and California.
It would lower the price tag by about $100 billion with a one-year delay on the corporate tax cut that Trump has sold as a key to faster economic growth. White House Budget Director Mick Mulvaney downplayed the harm of a delay Thursday. But a day earlier, Treasury Secretary Steven Mnuchin said, “The longer we wait, the worse it is for the economy and making companies competitive.”
The Senate plan preserves the estate tax -- though limiting it to fewer multimillion-dollar estates. The House bill would eliminate that levy in time.
Still, Hatch’s plan would give corporations a bigger break on taxes associated with trillions of dollars in earnings that they hold offshore than the House bill would. And it would set a lower top individual tax rate than the House envisions -- 38.5 percent for million-dollar earners as opposed to 39.6 percent.