WASHINGTON ― The Senate came closer on Wednesday to approving a bill that cuts taxes mostly for corporations and the wealthy.
The legislation, which also includes temporary tax breaks for middle-class households, cleared a procedural vote by a margin of 52 to 48. A vote on final passage could come as soon as Thursday.
Republicans had apparently not resolved several intraparty disagreements over the legislation, leaving key policy questions unanswered. They seem to be struggling most with the fact that the legislation would bring about a loss of revenue, and therefore add to the national debt.
Many Republicans have argued that, contrary to all evidence and expert analysis, the tax cuts would boost economic growth so much that the lost revenue would be recouped by increased receipts from surging business activity and personal spending. Those arguments are not carrying the day.
Several GOP senators emerged from a caucus lunch on Wednesday talking about the idea of including a debt “trigger” in the bill that would cut discretionary spending if the bill does not spur sufficient economic growth. Deficit hawks like Sens. Bob Corker (R-Tenn.) and James Lankford (R-Okla.) initially insisted on a similar measure that would roll back the bill’s corporate tax cuts if certain revenue targets aren’t hit in the future.
It remained unclear on Wednesday what the provision would ultimately look like.
“I do not like the idea of automatic tax increases,” Sen. John Kennedy (R-La.) said. “I would much prefer the idea of an automatic spending cut on the discretionary side. I would, frankly, think we don’t need either.”
Funnily enough, the Senate bill already includes substantial tax increases, because, in a bid to keep the legislation’s cost beneath $1.5 trillion over 10 years, most of the tax breaks for individuals would expire at the end of 2025. While those cuts would be temporary, the bill would permanently adjust the way tax brackets change with inflation. The brackets would rise more slowly than incomes, resulting in more income getting taxed at higher rates.
Sen. Mike Rounds (R-S.D.) said he didn’t think the trigger issue would need to be resolved before the Senate actually passes its bill. Instead, he suggested the Senate could pass the legislation, then resolve the trigger in the process of merging the House and Senate bills in what’s known as a conference committee.
“I think most of us expect a conference committee discussion would be appropriate,” he said.
Sens. Ron Johnson (R-Wis.) and Steve Daines (R-Mont.) had withheld their support of the bill over concerns that businesses that pay the corporate tax rate would disproportionately benefit from the legislation, while businesses whose earnings are taxed on owners’ individual returns would be left behind.
Both Johnson and Daines voted in favor of the motion to proceed to the final vote, however, amid talk of Republican leaders increasing the value of a new deduction for such “pass through” businesses from 17.4 percent to 20 percent.
“I’ve seen enough progress to vote yes to move the debate forward,” Daines tweeted Wednesday.
In a sign of growing momentum for tax reform, moderate Sen. Susan Collins (R-Maine), who bucked her party by opposing Obamacare repeal over the summer, voted to advance the tax bill despite concerns about it repealing the health care law’s individual mandate. She told reporters on Wednesday that she had secured a pledge from Senate Majority Leader Mitch McConnell (R-Ky.) to hold a vote this year on a bipartisan agreement known as the Alexander-Murray bill, which aims to stabilize Obamacare’s insurance markets.
That vote, Collins said, would likely take place alongside a short-term bill to fund the government next month.
Sen. Lisa Murkowski (R-Alaska), another key GOP holdout in the effort to repeal Obamacare, also announced her support for the tax bill on Wednesday.
“After thoroughly reviewing the good work of the Finance Committee, I intend to support the reconciliation legislation that is now before the Senate,” Murkowski said in a statement.
Ultimately, the House and Senate will have to agree on the same legislation before it can become law. House leaders advised members to be ready for a possible vote to go to conference by the end of this week if the Senate approves its tax bill on Thursday.