A handful of GOP senators — some conservatives and some moderate — have the ability to choke off a rotten tax bill. If they are inclined to reinforce their reputations as principled pols who care about policy, they will insist on a major reworking of the tax bill.
The first order of business should be removal of the individual mandate repeal from the Senate bill. Office of Budget and Management’s director Mick Mulvaney has already said the administration would want the provision to come out if it was a barrier to passage. The House didn’t bother to include it. It therefore should be a no-brainer for the three GOP senators — Lisa Murkowski of Alaska, John McCain of Arizona and Susan Collins of Maine– who opposed scuttling Obamacare to oppose this version as well. They saved the country from irresponsible and disastrous bills that would have rolled back coverage on millions of Americans and destabilized the exchanges. They were lauded as principled policy makers; to allow the individual mandate repeal to go through now would show them to be not so principled after all. As Collins said on ABC’s “This Week,” “The biggest mistake was putting in a provision from the Affordable Care Act into the Senate bill that is not in the House bill. And I hope that will be dropped or, that bills have been introduced by Senators [Lamar] Alexander and [Patty] Murray and Bill Nelson and myself will be adopted to mitigate the impact of those provisions.”
Then there is the matter of the tax bill itself. Fiscal hawks Sens. Jeff Flake (R-Ariz.) and Bob Corker (R-Tenn.) surely want to end their careers as opponents of a mammoth increase in the debt — one even larger than billed since a future Congress is unlikely to let the individual tax breaks expire. Flake and Corker, who have offered the most searing and effective critiques of the Trump presidency and fellow Republicans, would sound hypocritical if they now reversed course and passed the debt-generating tax bill. Surely they can make the case for revenue-neutral corporate tax reform, akin to the 1986 tax reform bill. To capitulate after all the tough talk would undercut their growing stature as truth-tellers.
As for Murkowski and Collins, they surely know that a vote for the tax bill means intense pressure will be brought to bear on Medicare and Medicaid, which the budget envisions cutting by billions. Moreover, to the extent they claim to oppose the politics of trickle down economics and want to direct help to the middle class, they should be obligated to vote against the monstrous bill in its current form. Collins insisted, “I also think the reduction in the business tax rate is too steep, and that we could go to 22 percent, and then use that money, which is about $200 billion, to restore the tax deduction for state and local property taxes. That would really help middle-income taxpayers.” On “State of the Union, she likewise argued, “The bill is going to be subject to amendment on the Senate floor. And I’m filing amendments myself, in part to provide more relief to middle-income families and to deal with the very problem that you have identified. The fact is that, if you do pull this piece of the Affordable Care Act out [the individual mandate], for some middle-income families, the increased premium is going to cancel out the tax cut that they would get.” To relent now would be a betrayal of her constituents.
And John McCain, for whom regular order and bipartisanship are essential, voting for the Senate bill — to be rushed through without any Democratic support and scant hearings (and before a Democrat from Alabama could possibly be seated) — would likewise undercut the reputation he has earned as defender of a constructive, bipartisan legislative process.
After stopping a bad bill, these and other Republicans can do something positive and pass tax reform with a substantial majority. They could, for example, go bold and look to Sen. Ben Cardin (D-Md.). He’s described a tax bill of the type many conservative economists favor:
The Progressive Consumption Tax Act creates a Progressive Consumption Tax, or “PCT,” that changes the way the federal government raises revenue. Rather than taxing income, the PCT generates reasonable revenue by taxing the purchase of goods and services. This revenue is used to exempt most households from any federal individual income tax liability and significantly lowers the corporate income tax rate. Low- and middle-income families would be protected from unfair consumption taxation through a PCT rebate, and important benefits would be retained in a much simpler income tax code.
Every other developed country in the world, including all other Organization for Economic Cooperation and Development (OECD) countries, have a consumption tax. A progressive consumption tax would improve America’s international competitiveness by putting American-based businesses on a level playing field with foreign businesses and by lowering the U.S. corporate tax rate below the OECD average. Although consumption taxes are already imposed by many countries around the world, the Act’s reforms would be new to the U.S. tax code.
If instead they want to stick to an income-tax-reform bill they should adhere to the 1986 reform — reduced rates in exchange for base-broadening. Corporations need not be taxed less; they should, however, be taxed more intelligently so as to encourage productive economic activity. As for the individual tax code, these lawmakers should rule out the 25 percent “pass-through” — a giveaway to the rich that, as Sen. Ron Johnson (R-Wis.) notes, would not help many small businesses — and abolition of the estate tax. The highest individual rate should remain as is if they really want to direct help to the middle class.
In sum, the way to do smart, bipartisan tax reform is to stop a dumb, partisan tax bill. Then Collins, McCain, Flake, Corker and others can reach across the aisle and find an accord with red state and reform-minded Democrats. They can proceed with careful, deliberate legislation to build consensus. If they are true to their word, they will be regarded as true political and policy heroes. If not, they unfortunately will join the ranks of disingenuous pols who talk a good game but perpetuate rabid partisanship and vote for fiscal irresponsibility and tax cuts for the rich.