Mark Up of Tax Reform Bill
|Nov. 9, 2017 - The House Ways and Means Committee finished four days of marking up the Tax Cuts and Jobs Act (H.R. 1), the far-reaching tax reform bill Republicans are rushing through Congress to send to President Trump by Christmas. After a series of Democratic amendments were rejected on party line votes, Committee Chairman Rep. Kevin Brady (R-TX) introduced a final 29-page manager's amendment to be voted on after a 20-minute recess, and the committee then approved the bill in a 24-16 party line vote. Brady said the session had provided for "full and thoughtful consideration" of the legislation.|
|A rare light moment.
The process Republicans are using tto pass this legislation is very reminiscent of how Democrats passed the Affordable Care Act in 2009, pushing it through without any support from the opposition party. As subsequent events have proved, that may not have been the wisest approach.
Nonetheless, having failed to repeal Obamacare, Republicans and President Trump are looking for a significant legislative accomplishment. Trump has set out an aggressive timetable, stating, "We are working to give the American people a giant tax cut for Christmas. We are giving them a big beautiful Christmas present in the form of a tremendous tax cut.”
Like their recent efforts to repeal the ACA, Republican leaders produced the tax reform legislation in secret, without hearings and without any Democratic cooperation. Trump kicked off the tax reform effort with a speech in Missouri on Aug. 30 (+). On Sept. 27 he announced what he called a "unified framework for fixing our broken tax code." He set forth three goals: a) providing relief for hardworking, middle-class families; b) restoring our competitive edge and creating more jobs and higher wages; and c) encouraging investment here at home (+). House passage of the budget on Oct. 28, cleared the way for introduction of the bill (+). On Nov. 2 Brady introduced the "Tax Cuts and Jobs Act," promising tax relief to "Americans across the country – especially low- and middle-income Americans" and to "businesses of all sizes" (+). The legislation would accomplish some long sought objectives including simplifying the tax code and cutting the corporate tax rate.
However, while Republicans are promising "more jobs, fairer taxes, bigger paychecks," critics have raised many concerns about the legislation. First, it would add about $1.5 trillion to the national debt over a period of ten years, which given that the debt already tops $20.4 trillion (>) seems fiscally irresponsible. Democrats argue the Republican plan would disproportionately favor corporations and the top 1%, the oft-cited millionaires and billiionaires. As the recent release of the Paradise Papers shows, the well-to-do have many ways to game the system. It is not at all clear what, if anything, this legislation would do to stop such abuses; indeed there are suggestions that some provisions would actually make matters worse.
On Nov. 9, the same day that the House Ways and Means Committee finished its mark up, Republicans on the Senate Finance Committee introduced their version of the "Tax Cuts and Jobs Act," noting the legislation "encompasses Republicans’ shared pro-growth, pro-middle-class vision, but offers different approaches on some policy provisions to achieve the unified goal (+)."
The job for Republicans in the Senate may be more difficult; given their thin majority they can only affort two defections. Sens. Bob Corker (R-TN) and Jeff Flake (R-TN) have already expressed concerns about the effect of this tax reform on the debt. Further complicating matters, for the Senate to pass tax reform legislation using the reconciliation process which allows for a simple majority rather than a 60-vote majority, the legislation must meet rules on how much it would add to the deficit (>). (The figure of $1.5 trillion over ten years is actually a threshhold, and one can see for example that estimates produced by the Joint Committee on Taxation conveniently come in at just under that level, $1,495.7 trillion). It will be interesting to see how the Senate mark up, which starts on Monday, fares.