Senate Republicans — shocker! — are discovering a bevy of errors and missteps in their tax bill rushed through in the middle of the night. Business Insider reports that a hasty decision to keep in place the alternative minimum tax for corporations “could have major consequences for businesses, such as eliminating the benefit of the research and development tax credit.”
Politico’s Brian Faler noted that the bill would impose a new tax on university endowments but does not define them. Universities with large financial holdings have multiple accounts to generate income, but [it’s] unclear which of those would qualify for the new tax.
Experts also noticed issues with the bill’s treatment of pass-through businesses and with a one-time tax on foreign profits of multinational corporations after the legislation passed.
Republicans are now convening a conference committee — made up of members of both chambers, mostly from the tax-bill-writing House Ways and Means and Senate Finance committees — to hash out differences in the versions of the bill and work out the errors.
It’s almost as though they were so desperate for a “win” that they would have passed anything put under their noses, huh?
Then, as day follows night, President Trump swiftly undercut Senate GOP leadership that had been taking a hard line on a 20 percent corporate tax rate, rebuking an amendment from Sens. Mike Lee (R-Utah) and Marco Rubio (R-Fla.) to scooch up the corporate rate to allow for a more generous child tax credit.
Leading Republicans are looking at scaling back some of the corporate tax cuts that they are trying to usher into law, two people involved in the tax negotiations said, convinced they need to find new revenue in order to make last-minute fixes to the giant package moving through Congress.
The House and Senate passed separate tax cut packages in recent weeks, and both bills would lower the corporate tax rate from 35 percent to 20 percent. But GOP negotiators are now openly discussing the possibility of moving that rate up to 22 percent in order to free up more revenue, people familiar with the discussions said. One of those people said the 22 percent rate is “seriously under discussion.”
While they are fixing the corporate rate and correcting gross errors, they might want to take a gander at the Tax Policy Center’s findings on the distributional effects of the bill. As The Post reports, TPC found that “slightly more than 24 percent of taxpayers would see a tax increase by 2027 under the version of the bill passed by the House. Under the Senate-passed bill, 48 percent of taxpayers would pay more by then, largely because of tax breaks that that are set to expire in five years.” The excuse, namely that this only “looks bad” because a future Congress would never allow cuts to expire, is an admission that they’re conning the deficit hawks and gaming the reconciliation rules that preclude deficit gains outside the 10-year budget window.
Republicans usually don’t care what TPC says, but they often follow the polls. They should. CBS News reports:
Thefaces opposition from a majority of Americans. Over half disapprove of it — including four in 10 who disapprove strongly, and only one in five Americans expect their own taxes to go down. Though the plan finds support from Republicans who believe it will help the economy overall, only one-third of Republicans expect their own taxes to go down. Large majorities of all political stripes believe the plan will , but only one in three believe it will help the middle class. …
More than half of Americans say they would be either disappointed or angry if the tax plan is signed into law. Even among Republicans, enthusiasm is somewhat muted. While most Republicans would be satisfied to see the Republican plan enacted, just one in five describe themselves as excited by the prospect.
This seems to be a case in which Republicans’ ideology and donor class are driving things — to what end we don’t know. Some form of the bill may pass, but it would behoove Republicans to take a breath and rethink the content of their plan. Otherwise, 2018 will be a major train wreck.