Three Groups of GOP Senators Who Could Stop Tax Reform

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Senate Republicans are pushing to pass their tax overhaul legislation this week. On Tuesday, the Senate budget committee will consider the bill.

While most of the 52 Republicans in the Senate have signaled their support for the bill and are expected to vote for it, at least a half dozen GOP Senators continue to oppose the bill or waiver on whether to support it. These can be divided into roughly 3 different groups: the deficit hawks, the pass-through stalwarts, and the Obamacare saviors.

The deficit hawks include Bob Corker, the Tennessee Republican, Jeff Flake of Arizona, and James Lanford of Oklahoma. In an appearance on CNBC Tuesday morning, Corker said he is working on a mechanism to raise taxes on individuals and businesses if tax revenues fall short of forecasts. The Joint Committee on Taxation has said that the Senate bill would add $1.4 trillion to budget deficits over the next decade. If all the tax cuts scheduled to expire in the Senate bill were extended–as many Republicans insist they will be–this number would rise to $1.9 trillion.

The details of the automatic tax hike mechanism Corker discussed have not yet been revealed. They seem likely to involve tax hikes on individuals rather than businesses. Corker said if he could he would “trash” all the individual tax cuts and push forward with the business tax cuts.

Allied to the deficit hawks are the pass-through stalwarts, led by Ron Johnson of Wisconsin and Steve Daines of Montana. These Senators want deeper tax cuts for so-called pass-through businesses such as partnerships. Under the Senate bill, the owners of these entities would get an individual tax deduction equal to 17.4 percent of their gains. Johnson and Daines want to see this increased. Under the House bill, these entities would pay a 25 percent tax rate.

Addressing these concerns, however, risk alienating other provisions and providing ammunition to critics of the GOP bills. Giving a larger deduction to pass-throughs, most of whose income goes to top-earners, would skew the tax cuts even further to wealthier Americans. And building in an automatic tax hike on individuals could also skew the tax cuts more toward businesses than individuals, a line of attack favored by liberal critics of GOP overhaul efforts.

The last group of wavering GOP Senators include John McCain of Arizona and Susan Collins, two Senators who helped kill efforts to repeal and replace Obamacare earlier this year. Their concerns over the tax bill haven’t been well-articulated to this point but could include a provision of the bill that would end the Obamacare individual mandate.

Because the GOP majority is so thin in the Senate and no Democratic support is expected, Republicans can only afford to lose two Senators. That means any one of these blocs could eventually kill the tax overhaul.

The Senate Budget Committee is scheduled to vote on the bill on Tuesday. Both Corker and Johnson are on that committee and could block the bill, likely delaying a vote. President Donald Trump is supposed to meet with Senate Republicans on Tuesday to urge passage of the bill and discuss possible changes.

 

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