It’s been a bleak fall for Republicans in Congress, and they’re clamoring for a victory: specifically, they want tax reform. After months of teasing what would be the first significant overhaul of the U.S. tax code in more than 30 years, Republican lawmakers finally introduced the bill, known as the Tax Cuts and Jobs Act, last Thursday.
Speaker of the House Paul Ryan asserts that it will pass in the lower chamber by Thanksgiving. That is a bold ask: there are only eight legislative days between Nov. 6 and then, and a number of kinks are still being ironed out in committee. It carries a number of measures that have proven controversial not only among Democrats — who accuse the G.O.P. of drafting the bill behind closed doors — but also several interest groups in Washington and more than a handful of conservatives.
Here’s what could trip things up.
Irate lawmakers from states with high taxes.
In its effort to drastically simplify the federal tax code, the Tax Cuts and Jobs Act does away with a number of old deductions and loopholes — notably the state and local tax (SALT) deduction, which allows taxpayers to subtract the amount they pay in state and local taxes from the final sum that’s taxed federally. It’s a boon for taxpayers in high-tax states like New York, California, New Jersey, and Illinois: by one estimate, one-fifth of all SALT claims came from California and New York alone.
Predictably, the lawmakers who represent those taxpayers have spoken out against the bill in its current form. On Oct. 26, 20 Republicans voted against the budget framework that was needed before tax reform could continue; 11 of them were from New York and New Jersey. Rep. Peter King, a New York Republican, said on ABC on Sunday that “as of now, [he] would be a ‘no’ vote” on the tax reform bill.
When the Ways and Means Committee assembled on Monday to begin marking up the bill, Rep. John Larson, a Democrat from Connecticut, described the piece of legislation — and the fact it was going forward without a public hearing — as “a great charade.”
“People in my state are going to get a tax increase,” he said.
The sheer cost of the thing
The problem with cutting taxes — and this bill does cut taxes, particularly for the wealthy — is that you have to pay for it. Slashing taxes means less revenue for the government. Last week, Rep. Kevin Brady, the Texas Republican who chairs the House Ways and Means Committee, said that this tax reform package would cost the U.S. $1.51 trillion over the next ten years.
This would alienate deficit hawks on Capitol Hill. But more critically, it would transgress the rules that lets the Senate to pass the bill through the process known as reconciliation, which allows legislation to pass with only a simple majority of 51 votes. For a bill to be considered under reconciliation, it must not add to the federal deficit after a decade, a measure known as the “Byrd Rule.”
The Senate is expected to release its version of the bill later this week, per Politico. Given these constraints, this document is likely to contrast with the one before the House.
Slim majorities and legislative drama
Assuming the tax reform package makes it to the floor of the Senate unscathed, its fate there is far from certain. Even with the benefit of reconciliation, Republicans have a slim majority — 52 of the 100 seats — that has so far failed to bulwark their legislative priorities. Remember when the Senate tried to repeal Obamacare? (It happened twice.) There’s little room for error: only two ‘no’ votes could doom the thing altogether.
And there are dozens of possible combinations of defectors. Republican Sens. Susan Collins of Maine Bob Corker of Tennessee have expressed concerns over the matter of the budget, Politico reports. It is not out of the question that Sens. John McCain and Jeff Flake, both independent-minded senators whose impending departures from Congress have freed them to act and speak their minds, could turn against the bill. (Flake has also spoken out against the deficit problem.) On top of that, Sen. Rand Paul of Kentucky — whose vote was already a matter of discussion — is currently recuperating from injuries sustained in an assault by a neighbor on Nov. 3. Reports say five of his ribs are broken, and that it’s too early to say when he’ll be back on the Senate floor.
There are myriad balls in the air. Trump said last week that signing tax reform into law by the end of the year would be his “Christmas gift” to the country. Christmas, it’s said, is a time of magic — and in this case, magic might be needed.
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