A group of conservative House Democrats is embracing some elements of a GOP plan to cut taxes, potentially creating an opening for Republicans to win bipartisan support.
The Blue Dog coalition, which has 18 members in the House, said it’s open to lowering business taxes, the first significant sign of a crack in Democratic opposition to the GOP approach. Their position was included in a plan released Wednesday outlining the group’s stance on taxes.
The Blue Dog proposal comes as Republicans are trying to build support for their nine-page tax framework, released last week, which faces opposition from many Democrats and objections raised by a handful of GOP lawmakers. Tax-writing committees in the House and Senate must now settle some of the most divisive issues, including where to set the top individual income tax rate and whether cuts should be paid for.
It remains to be seen whether lawmakers from the Blue Dog group can resolve their policy differences with the GOP plan and support a measure Democratic leaders oppose. Republicans would benefit from attracting Democratic votes and being able to market the legislation as bipartisan.
Lowering Rates
In their plan, the Blue Dog group indicated a willingness to lower the tax rate for corporations and pass-through businesses, which include partnerships and limited liability companies. Democrats have largely opposed those changes, arguing the Republican plan is too generous to businesses and the wealthy, and not helpful enough for the middle class.
The GOP tax framework calls for cutting the corporate tax rate to 20 percent, down from 35 percent. It would set the rate on pass-through income at 25 percent, down from a current top rate of 39.6 percent.
The Blue Dog group differs with the Republicans over whether an overhaul should add to the deficit. The group says a tax overhaul shouldn’t increase the deficit, while the Republican framework is estimated to add $2.4 trillion to the deficit, according to an estimate by the Tax Policy Center.
“This tax reform policy has to be paid for,” said Representative Mike Thompson, a Blue Dog member from California. “Hocus pocus is not one of the Blue Dog principles.”
The Blue Dog plan urges Republicans to abandon the process they’re using for considering tax legislation. Republicans plan to seek passage of a tax overhaul on a simple majority vote in the Senate, where the party holds 52 seats, instead of the 60-vote majority generally needed to pass legislation. The Blue Dog group also wants to ensure there are complete estimates of the ultimate plan’s cost by the Joint Committee on Taxation and the Congressional Budget Office.