GOP on hunt for tax-cut funding

Republicans are wrestling with how to pay for their tax cuts.

President Trump and congressional GOP leaders have set ambitious goals for their tax-code overhaul — including slashing the corporate tax rate from 35 to 20 percent and cutting most individual rates.

With Republicans promising legislative text next week, the hunt is on to find ways to fund $1.5 trillion in cuts. 

{mosads}“The options are many. We are wrestling through all of them,” Rep. Lynn Jenkins (R-Kan.) said about potential revenue raisers.

House Ways and Means Committee Chairman Kevin Brady (R-Texas) said Tuesday that his plan is to release a tax bill Nov. 1 if things go according to plan. That starts with the House voting Thursday on the Senate’s budget framework.

The panel’s Republican members met for several hours Tuesday morning and then in a wider-ranging meeting of the broader caucus later in the afternoon.

Leaving the meetings, lawmakers were tight-lipped but said they covered a wide range of tax topics.

Offsets to fund specific tax cuts that Republicans have promised for years, like a repeal of the estate tax, are “exactly what we’re talking about,” said Rep. Kristi Noem (R-S.D.), though she declined to name specifics.

In addition to the corporate cuts, the tax framework that Republicans released in September calls for lowering the top rate for “pass-through” businesses that are taxed through the individual code from 39.6 percent to 25 percent. Additionally, Republicans want to trim the number of individual tax brackets, double the standard deduction and eliminate many deductions.

Conservatives say that they do not want the business tax rates to be any higher than the rates proposed in the framework.

That means that Republicans will need to offset tax cuts by limiting and eliminating many of the tax preferences in the current code.

But they are facing headwinds on that effort from lobbyists, Democrats and even other lawmakers in their own party.

The tax plan that House Republicans released last year would have raised more than $1 trillion over a decade through a tax on imports, but that idea was set aside in July amid strong opposition within the GOP caucus and business community.

House Republicans also proposed in that plan to eliminate the deduction for businesses’ interest expenses, but the framework from September scales that back to partially limiting the deduction for corporations. 

And their most recent ideas have faced opposition, too.

The current framework called for eliminating the state and local tax deduction, but that garnered opposition from GOP House members in high-tax states such as New York, New Jersey and California. A compromise on the issue looks likely.

“I do know a compromise position on state and local is in the works, so that gives me comfort that I can support the budget,” said Rep. Tom Reed (R-N.Y.), a member of the tax-writing committee.

Other potential revenue raisers face pushback from the White House. President Trump on Monday tweeted that changes won’t be made to 401(k) plans, after lobbyists had gotten word that lawmakers were considering significantly reducing the amount that people could put into the retirement plans on a pretax basis.

Some lawmakers are concerned that the challenges with deciding how to pay for the cuts could imperil achieving the desired benefits of tax reform.

Rep. Dave Brat (R-Va.) called the elimination of funding options “the scary background noise we’re hearing right now.”

“If you lose the pay-fors, you lose your ability to lower the rates the way we want to,” he said Tuesday at a “Conversations with Conservatives” event.

The pressure is on for GOP tax writers, as other Republican lawmakers have become antsy about the lack of specifics released thus far.

“I’ve shared my frustrations that we have no details,” said Rep. Chris Collins (R-N.Y.)

Rep. Matt Gaetz (R-Fla.) said he wished a draft of the tax bill would be released before the budget vote.

“I was watching Indiana Jones the other night, and I sort of feel like this tax bill is like the Ark of the Covenant,” he said. “It must be so magnificent that if we actually laid our eyes on it, it would eviscerate all of us.”

The House will release its bill first, with Speaker Paul Ryan (R-Wis.) aiming to have legislation passed by Thanksgiving. On the Senate side, Republicans once again can only afford to lose two votes and will face their own challenges.

Sen. Bob Corker (R-Tenn.) has said he wants a bill that will not add to the deficit and wants its changes to be permanent.

But the procedure moving the legislation through the Senate requires a bill to provide no increase to the deficit after 10 years, tempting tax writers to make some changes temporary.

Corker told reporters that he hopes tax writers are vigilant about trimming tax breaks — “otherwise you don’t have tax reform that’s permanent in nature.”

The issues of the deficit and paying for the cuts could be a bigger consideration for Corker on taxes than his feuding with Trump, which escalated on Tuesday.

“Tax reform has been something that all of us would like to see happen, and I can’t imagine there’s any senator — maybe like one or two, I don’t who they are — that would vote against something they thought was good policy over some personal issue. I certainly would not do that,” Corker said following Trump’s lunch Tuesday with Senate Republicans.

“On the other hand, the bill’s got to meet the criteria that I’ve laid out.”