By Richard Rubin
WASHINGTON -- House Republicans are busily preparing what they
call "Tax Reform 2.0," an extension of tax cuts they passed last
year that are scheduled to expire after 2025. So far, their Senate
counterparts aren't so interested.
House Republicans expect to vote on their tax plan in September,
and one leading option is a three-bill package: Extension of
expiring tax cuts, expansion of incentives for savings and policies
to promote innovation.
The tax-cut extension, the largest of the three bills, is the
one that is most likely to become a campaign-season talking point
and also least likely to become law this year.
"We've got a pretty full agenda," said Sen. Bill Cassidy (R.,
La.), listing nominations, spending bills and flood insurance as
priorities ahead of the new tax bill.
Republicans in the Senate have a 51-49 advantage, but the bill
would need 60 votes to clear procedural hurdles. Sen. John Thune
(R., S.D.), a member of GOP leadership, said Republicans likely
wouldn't bring the tax bill to the floor unless they're sure it
could get 60 votes.
Even attempting a sure-to-fail vote carries risks for Senate
Republicans, because a few Democrats up for re-election in states
won by President Donald Trump could muddle the GOP's campaign
message against them by voting for middle-class tax cuts.
One of those Democrats, Sen. Claire McCaskill of Missouri, said
she backed making the "tax cuts for regular families" permanent but
that they should be paid for. One suggestion she made was lowering
the income cap for child tax-credit eligibility, which now starts
phasing out at $400,000 for married couples.
"I don't know how they look in the mirror. I can't remember how
many righteous lectures I got from my Republican colleagues about
the debt and deficit," she said.
The tax cuts expire because of choices Republicans made as they
passed their tax law without any Democratic votes last year. They
used a fast-track procedure that let them avoid the 60-vote Senate
threshold, but it came with the restriction that they couldn't
increase budget deficits beyond a decade.
They made the corporate tax-rate cut permanent to give companies
certainty, and they set the individual tax cuts to expire after
2025. If Congress doesn't act, the top tax rate would return to
39.6% from 37%, the child tax credit would shrink back to $1,000
from $2,000, the standard deduction would get cut and a new break
for partnerships and other pass-through businesses would
vanish.
"We want to work toward permanence, making sure these tax cuts
that Americans are already working on and using now can become
permanent," said Rep. Jim Renacci (R., Ohio).
Tax increases embedded in the law, including limits on the state
and local tax deduction and the elimination of deductions for
personal exemptions, would also reverse after 2025 if Congress
doesn't act. On net, extending all those major changes would reduce
federal revenue by $214.5 billion in 2027 alone, according to the
conservative-leaning Tax Foundation. Mr. Trump has also suggested
lowering the corporate tax rate from 21% to 20%.
"We're very well-aligned with the White House," Rep. Kevin Brady
(R., Texas), chairman of the House Ways and Means Committee, said
after a meeting Tuesday with Mr. Trump. "We continue to have
discussions with the Senate and listen to what they'd like to
see."
Mr. Brady's Senate counterpart, Orrin Hatch of Utah, backs
making the tax cuts permanent and wants to "find a viable path and
timing to achieve this goal," said his spokeswoman, Julia
Lawless.
Mr. Cassidy said he is confident that a future Congress would
extend the tax cuts before they expire. He pointed to 2013, when
President Barack Obama and a Senate controlled by Democrats agreed
to extend most of the tax cuts created under President George W.
Bush in 2001 and 2003.
"History tells us that tax cuts for families tend to get
extended," he said.
The other pieces of the House GOP tax agenda stand a somewhat
better chance of becoming law if passed separately. There's
bipartisan interest in incentives for retirement savings, and the
outlook for them will become clearer once Republicans release
details.
It isn't certain that Senate Republicans could muster a majority
for a tax-cut extension. Sen. Bob Corker (R., Tenn.), who voted
against the Senate's tax bill before voting for the House-Senate
compromise that became law, said he only backed individual tax cuts
because they were tied to corporate changes.
"I would have been far happier with no individual changes, and
therefore I can't imagine possibly supporting extensions," he
said.
--Siobhan Hughes contributed to this article.
(END) Dow Jones Newswires
July 19, 2018 05:44 ET (09:44 GMT)
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