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Senate Begins "Marking Up" Tax Reform Plan As Post-Thanksgiving Vote Looms

The House is expected to vote on and, hopefully, pass its tax reform package on Thursday, but the Senate’s plan still hasn’t made it out of committee. Luckily for the Trump administration – which badly needs this legislative victory to stave off a donor mutiny -  this could soon change: To wit, the Finance Committee has started the process of ‘marking up’ the bill, that is, the process of adding amendments and making alterations. But the process still needs to run smoothly if McConnell is to meet his deadline of starting floor consideration the week after Thanksgiving.

Every day, the chances that the bill will pass by the administration’s year-end deadline appear to dim, something evidenced by the murmurs about trying to convince a Democrat or two to break ranks and support the Trump plan.

“The first day of the Senate Finance Committee hearing featured Republicans and Democrats exchanging jabs over the proposal to slash corporate taxes and reduce individual rates, while closing some tax breaks.

 

The House is expected to pass its version of the bill Thursday as Republicans seek to put a bill on President Trump’s desk by year’s end.

 

It’s a heavy lift, given the tight time frame and differences between the chamber’s bills, though so far Republicans are hitting their marks.

 

Senate Finance Committee Chairman Orrin Hatch (R-Utah) sought to highlight aspects of the measure that Democrats have supported in the past, including its preservation of some individual tax breaks and changes to the international tax system.

 

“Long story short: Our proposed international reforms are not just a Republican wish list or some sort of favor to big companies,” he said. “They are, in fact, well within the bipartisan mainstream.”

 And in one hint at which side may win out in the battle over the soul of tax reform, the JCT reported that the Senate's plan to rewrite the tax code would go much further than a competing House proposal toward making good on Republican promises to focus on the middle class, a new report shows, Politico reported.

The markup process will continue Tuesday, when lawmakers will question JCT officials and potentially begin to discuss amendments.

Lawmakers have submitted some 355 amendments, though not all of them will be considered.

A notable one from Orrin Hatch would make unspecified changes to ensure the bill doesn’t add to the deficit after 10 years. The legislation can’t increase the deficit outside of the budget window if Republicans want to pass it with only a simple majority.

Republicans also sought to rebut Democratic criticisms that they were shut out of the drafting process and that the bill benefits the rich.

However desperate, recruiting support from some Democrats could be key.

Interestingly, the Hill reports that no Republican senators have said they oppose the bill. And while that’s technically true, at least four Republicans have said they oppose the House plan, and have expressed misgivings about certain elements of the senate proposal. For example, John McCain has said he wouldn’t vote for any bill that didn’t have some measure of bipartisan support. And while Republicans are making a nominal effort to reach out to Democrats, nobody expects even Red State Dems like West Virginia’s Joe Manchin III to break ranks over tax reform.

Also, Sens. Jeff Flake and James Lankford have expressed concerns about how the legislation might bloat the debt, while Sens. Marco Rubio and Mike Lee are pushing for a bigger child tax credit.

There are many discrepancies between the House and Senate tax plans. But these are the two largest: That the Senate bill would delay the corporate tax rate cut until 2019, while the House bill has the cut take effect more immediately. And the Senate bill also repeals the full state and local tax deduction, while the House bill retains a property tax deduction of up to $10,000 to appease enough blue-state Republicans to pass the bill.

And so far, it appears both sides remain firmly committed to their respective versions of the bill. House Ways and Means Committee Chairman Kevin Brady has made it clear that he will fight to keep the $10,000 property tax deduction in the final bill. Others in the Senate have sharply criticized the SALT deduction, arguing that it’s tantamount to a subsidy when the low-SALT states can’t deduct as much from an itemized return.

The Hill claims that Trump could complicate the process of passing the bill by injecting himself into the debate, like he did again Monday by proposing that the final legislation include repeal of ObamaCare’s individual insurance mandate and lower the top individual tax rate to 35%.

Case in point: Steven Mnuchin told the Wall Street Journal that the Trump administration wouldn’t support tax legislation with a corporate tax rate of more than 20% as part of any future compromise between the House and the Senate.

“It’s not going up,” he said. “I can tell you this is one of the things the president feels very strongly about.”

The House bill maintains a top individual tax rate of 39.6 percent, while the Senate bill lowers the top rate slightly to 38.5 percent. Neither bill repeals the individual mandate.

In another case of mixed messaging surrounding the contents of the bill, GOP lawmakers say they’re still considering including individual mandate repeal in the tax legislation, but Brady also said he doesn’t expect major changes to the House bill before it comes to the floor.

Trump badly needs a win on tax reform following the embarrassing death of the Obamacare repeal-and-replace bill in the Senate earlier this year. In an effort to rally the troops, president will address the House GOP conference Thursday morning, ahead of the chamber’s vote.

Now we wait to see if Paul Ryan is forced to reschedule the vote at the last minute, like he has done so many times already this year.