A day after saying they had a deal on a final tax bill, House and Senate Republicans leaders were still scrambling Thursday to resolve some math problems complicating their rush to unveil the legislation on Friday and set up votes for next week.
One Big Question: How to Pay for All the Tax Cuts?
The tax writers have been moving rates higher and lower in an effort to meet the demands from within their party while staying below the $1.5 trillion cost limit set by the Senate. But there are signs that the cost is still an issue.
“We’re literally trying to squeeze about $2 trillion in tax reform into a $1.5 trillion box and that’s been a problem,” said Senator Ron Johnson (R-WI).
The tax committee has reportedly made some expensive changes in the past few days, including tweaking the state and local tax deduction, dropping the top individual tax rate to 37 percent, retaining deductions for medical expenses and eliminating the corporate alternative minimum tax. Those changes reportedly could add more than $200 billion to the cost of the plan.
But offsets on the revenue side have been harder to come by.
One option under consideration, according to The Washington Post, would be to have the tax cuts for individuals and families expire in 2024 instead of 2025 as called for by the Senate bill. “That’s one of the things we’re looking at,” Senate Finance Committee Chairman Orrin Hatch (R-UT) confirmed to the Post.
Such a change would reportedly raise nearly $170 billion, but it would also open Republicans up to further criticisms that their tax overhaul is tilted toward businesses and the rich, and that it relies on gimmicks to make the numbers work. Republicans, after all, have said that they expect those individual tax cuts to be extended by a future Congress.
Could Marco Rubio Kill the Tax Bill?
The other big math problem Republicans face is ensuring they have the votes needed to pass their plan, especially on the Senate side. Sen. Marco Rubio (R-FL) said Thursday afternoon that he would not vote for the GOP tax bill unless the value of the refundable child tax credit is increased.
“I think my requests have been pretty reasonable and consistent and direct. Right now the refundability level is $1,100. It needs to be higher. It’s a pretty straightforward ask. If the refundable portion of the child credit is substantially increased beyond the $1,100 it currently is, I’ll vote for the bill. If it’s not, I won’t,” Rubio said.
Sen Mike Lee (R-UT) has also expressed interest in a larger refundable child tax credit, and a spokesperson said he is undecided on the bill. Sens. Susan Collins (R-ME) and Bob Corker (R-AZ) say they are waiting to see the final bill to determine how they will vote, leaving Republicans with four uncommitted votes. The GOP can afford to lose only two votes in the Senate.