McConnell: GOP prepared to go it alone on tax reform

Senate Majority Leader Mitch McConnell (R-Ky.) said Monday that Republicans are prepared to use a special budgetary procedure allowing them to overhaul the U.S. tax code without Democratic votes, if necessary.

The GOP leader confirmed that Senate Republicans will pass two budget resolutions next year allowing them to circumvent Democratic filibusters against repealing ObamaCare and cutting tax rates for individuals and businesses.

“We anticipate doing two budget resolutions this year. The first will be the ObamaCare repeal resolution, and then we will do one later in the spring, which will largely be dedicated to tax reform,” he told reporters. “They will set up reconciliation follow-on vehicles for us to address to very important issues.”

Under the budgetary process known as reconciliation, the party that controls the Senate can pass legislation with simple majorities instead of the 60 votes usually required for controversial bills. But initiatives protected under this process must affect federal taxes, spending or deficits and sunset after 10 years if they have any budgetary impact beyond a decade.

{mosads}Democrats used the same tactic to modify the Affordable Care Act in 2010 without any Republican votes in the Senate.

McConnell said President-elect Donald Trump and Republicans are very concerned about what he called the “off-shoring” of U.S. jobs.

“The single biggest reason for that is our tax structure, which makes it very difficult in many instances to stay here because the corporate tax rate, and now the individual tax rate that most businesses use as well, is way too high,” he said.

The United States has the highest statutory tax rate in the world — not counting the benefits many companies reap from claiming tax deductions — at 35 percent, or as high as 39 percent when state and local taxes are taken into account.  

To avoid domestic taxes, U.S. companies have moved headquarters overseas or merged with foreign-based corporations in a maneuver known as an inversion.

Drug giant Pfizer announced last year that it would merge with Allergen and set up its headquarters in Ireland, which has a 12.5 percent corporate tax rate.

The House, where all revenue-related bills must originate, is expected to take the lead on tax reform.

McConnell has called for tax writers to overhaul the individual rates along with corporate rates in a comprehensive package.

While some lawmakers think it might be easier to focus on corporate taxes alone, McConnell has argued that cutting rates for big businesses while not addressing the individual rates under which many small businesses and so-called pass-through businesses file would not be fair.