Photo by THE ASSOCIATED PRESS Senate Majority Leader Mitch McConnell, R-Ky., speaks to a group of small business owners as Republicans work to pass their sweeping tax bill, a blend of generous tax cuts for businesses and more modest tax cuts for families and individuals, on Capitol Hill in Washington, Thursday.

Senate weighs scaling back tax package to win deficit hawks

WASHINGTON — Senate Republicans weighed scaling back the tax cuts in their massive package to secure crucial support as congressional analysts said Thursday the legislation would add $1 trillion to the nation’s debt over the next decade.

Republicans were making major changes to the bill up to the last minute, including one that would roll back some of the tax cuts after six years to appease deficit hawks. The first revamp of the tax code in three decades — a top political priority of President Donald Trump — would affect nearly every American and business.

The scramble to alter the bill came after senators said the chamber’s parliamentarian had ruled that automatic “triggers” designed to guard against big deficits would violate Senate rules. GOP leaders’ main concern was winning over lawmakers, including Sens. Bob Corker of Tennessee and Jeff Flake of Arizona, concerned about adding more red ink to the deficit.

GOP leaders also were struggling to placate Wisconsin Sen. Ron Johnson, who wanted an increase in the deduction for business income.

Senate Majority Leader Mitch McConnell, R-Ky., had expressed confidence early in the day, but he has little margin for error with a 52-48 majority. He can afford to lose two votes while counting on Vice-President Mike Pence to break the tie.

Sen. John Cornyn, R-Texas, said the bill will have “alternative, frankly, tax increases we don’t want to do” to deal with deficit concerns.

Flake said the tax increases would raise about $350 billion over 10 years, though he didn’t specify which taxes would go up.

Forced to rewrite the bill behind closed doors, Republican hopes of passing the bill late Thursday slipped to Friday.

In a dramatic turn, Democrats forced a vote on whether to return the measure to the Senate Finance Committee so it could be rewritten to ensure smaller deficits. They nearly prevailed in derailing the measure as Corker, Flake and Ron Johnson of Wisconsin held out for just over an hour, repeatedly cajoled by their colleagues. They eventually joined fellow Republicans to scuttle the Democratic proposal.

Corker has been pushing to add automatic tax increases in future years if the package doesn’t raise as much revenue as projected.

With the provision seemingly dead, Corker said senators would change the bill to roll back some of the tax cuts in future years, regardless of whether tax revenues meet expectations. Flake said the tax increases would take affect after six years.

The overall legislation would slash the corporate tax rate, offer more modest cuts for families and individuals and eliminate several popular deductions.

Lawmakers will then try to reconcile the Senate bill with one passed by the House in the hope of delivering a major legislative accomplishment to Trump by Christmas. Republicans have cast passage of a tax overhaul as a political imperative to ensure they hold their House and Senate majorities in next year’s midterm elections.

A new analysis by the nonpartisan Joint Committee on Taxation found that the bill would add $1 trillion to the deficit.

The tax bill would increase economic growth, generating an additional $458 billion in tax revenue, according to the analysis. That’s far short of the $2 trillion promised by Treasury Secretary Steven Mnuchin.

Two Republican senators, John McCain of Arizona and Lisa Murkowski of Alaska, announced their support for the tax package Thursday, giving it a major boost. Both McCain and Murkowski had voted against the GOP bill to dismantle the Obama health care law this past summer.

Senators were still grappling with several issues Thursday, including a provision to add a deduction for local property taxes. The current Senate bill completely eliminates the federal deduction for state and local taxes, a popular deduction in the Democratic-leaning states of New York, New Jersey, California and Illinois as well as many wealthy suburbs nationwide.

Sen. Susan Collins, R-Maine, proposed an amendment to let homeowners deduct up to $10,000 in local property taxes on their federal returns. It is similar to a provision in the House-passed bill.

Without the deduction, Collins said, it would be “very problematic for me” to vote for the bill.

Collins would make up the estimated $146 billion in lost revenue by keeping the personal income tax rate for the wealthiest earners at 39.6 per cent and making a smaller cut in the corporate tax rate. Trump and other Republicans insist that the corporate tax rate must be reduced from 35 per cent to 20 per cent.

Sen. Steve Daines, R-Mont., backed the package Wednesday after securing an increase in the deduction for business income from 17.4 per cent to 20 per cent. The deduction is for business owners who report their business income on their individual tax returns.

Johnson said Thursday he is still withholding support for the bill because he would like the deduction increased to 25 per cent. He would pay for it by repealing the corporate deduction for state and local taxes.

The plan would nearly double the standard deduction to around $12,000 for individuals and about $24,000 for married couples. The tax cuts for individuals would expire in 2026 while the corporate tax cuts would be permanent.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

About 50 AUPE members were protesting outside Red Deer Regional Hospital Centre early this morning. (Photo by SUSAN ZIELINSKI/Advocate staff)
UPDATED: Health care workers strike at Red Deer hospital

Some surgeries and ambulatory care clinics postponed around the province

B.C. Liberal leader Andrew Wilkinson, B.C. NDP leader John Horgan and B.C. Greens leader Sonia Furstenau. (Black Press Media)
VIDEO: One day until B.C. voters go to the polls in snap election defined by pandemic

NDP Leader John Horgan’s decision to call an election comes more than a year ahead of schedule and during a pandemic

Alice Kolisnyk, deputy director of the Red Deer Food Bank, says the agency expects an increase in demand as the COVID-19 pandemic continues. Every new subscription to the Red Deer Advocate includes a $50 donation to the food bank. (Photo by BYRON HACKETT/Advocate Staff)
Support the food bank with a subscription to the Red Deer Advocate

The community’s most vulnerable members are always in need of a hand,… Continue reading

Pumpkins for the 46th Annual WDACS Pumpkin Ball on display at Vision Credit Union Wetaskiwin. Shaela Dansereau/ Pipestone Flyer.
46th Annual Pumpkin Ball held virtually this year

This year the pumpkins were sold over a six-day online auction.

The Red Deer Regional Hospital Centre could be affected by cuts to Alberta Health Services announced by the government Tuesday. (Photo by BYRON HACKETT/Advocate Staff)
David Marsden: Yes, we know how to do laundry

Union leaders would have us believe there’s something special about their members:… Continue reading

Email letters to editor@interior-news.com
Removing Molly Banister extension makes no sense

Re: “Removing road extension would be ‘terrible,’ says former city manager,” Oct.… Continue reading

jj
NDP is certain to tire of propping up Trudeau’s Liberals

To impose his will on the House of Commons, Prime Minister Justin… Continue reading

Mariah Bell of the United States competes during women’s freestyle program in the International Skating Union Grand Prix of Figure Skating Series Saturday, Oct. 24, 2020, in Las Vegas. (AP Photo/David Becker)
Canadian Keegan Messing earns bronze at Skate America in Vegas, Chen wins gold

Messing earns 266.42 points at Skate America in Las Vegas

In this Oct. 7, 2020 photo, chef Sohla El-Waylly prepares Swedish meatballs during a taping of “Stump Sohla,” in New York. El-Waylly became a familiar face on YouTube as a standout on Bon Appetit’s test kitchen channel. But during the nationwide racial reckoning following the police killing of George Floyd, she was among members of the test kitchen who accused the channel’s owner, Conde Nast, of discriminatory practices. She departed Bon Appetit in August after failed negotiations. Her new show is her own, pushing her to deploy her talent, charm and encyclopedic culinary chops to solve challenges. (AP Photo/Mary Altaffer)
‘Babish’ expands as pandemic boosts YouTube cooking shows

Daily views of videos with “cook with me” soaring

Most Read