politics

Trump’s Tax Plan Takes a Big Step Forward, But What Comes Next Won’t Be Easy

Updated on
  • Array of amendment votes reveals challenges ahead for Congress
  • Deficit and middle-class concerns top list of thorny issues

Senate Adopts Budget in Boost to Trump's Tax Plan

President Donald Trump’s top legislative priority took a major step forward as the Senate narrowly approved a budget vehicle for tax cuts -- but sharp divides over an array of non-binding amendments revealed the towering challenge he faces from here.

Senator Rand Paul split from the GOP to vote against the budget resolution, which squeaked by on an all-Republican vote of 51-49 Thursday night and unlocked the Senate’s special procedure to pass a tax bill with only 50 votes. Paul objected to a provision to raise military spending by $43 billion, and also broke with his party by voting with Democrats against an amendment to reduce the state and local tax deduction, which could raise tax bills for some.

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“Rather than bicker over raising tax on some people and lowering taxes on other people, we should cut everyone’s taxes,” the Kentucky senator said. He has insisted that no middle-class taxes go up, a high bar for a complex bill to meet.

Amendments that were offered during a so-called vote-a-rama revealed a sharply divided Senate that leaves Republican leaders with few votes to spare in order to claim their first big legislative victory in the Trump administration. Still, GOP senators united to defeat Democratic measures that would have slapped restrictions on the yet-to-be-written bill to prevent higher deficits, block tax cuts for the top 1 percent of earners, and bar any tax hikes on incomes under $250,000.

Republicans tacked on an amendment to the Senate budget that will enable the House to adopt it without the need for a messy conference committee before the legislating can begin, said a House GOP leadership aide. It could happen as soon as next week.

“In the House, I look forward to swift passage and to working with the president on tax reform, to provide relief to all Americans,” House Budget Committee Chairman Diane Black of Tennessee said in a statement Friday.

The two chambers are poised to take their own separate paths on an actual tax bill, and -- if each passes -- combining those into one that can clear both houses of Congress will be their greatest challenge.

Finalizing Plan

House Speaker Paul Ryan of Wisconsin told “CBS This Morning” Friday that adoption of the budget resolution in the Senate clears the way for details of the tax plan to be finalized in "a number of days; then we’ll put this bill out."

Republicans will introduce a fourth tax bracket in their overhaul proposal "so that high-income earners don’t see a rate cut," Ryan said. Middle class taxpayers will also see benefits from closed loopholes and canceled carve-outs that disproportionately benefit the wealthy, he said.

Senator Bob Corker of Tennessee, a retiring Republican who has recently feuded with Trump, voted to advance the budget resolution, which allows a tax bill to raise the deficit by up to $1.5 trillion.

But Corker has said his support for the budget resolution was merely to satisfy Senate rules, and he declared in a statement after the vote that he wants to make sure the tax bill “does not add to the deficit, sets rates that are permanent in nature, and closes a minimum of $4 trillion in loopholes and special interest deductions.” He added that he’d support “reasonable” assumptions about economic growth stemming from tax changes.

‘Millionaires and Billionaires’

Senator Susan Collins of Maine, a moderate Republican, opposed the 1 percent amendment, but said she supports a tax on “millionaires and billionaires.” (The top 1 percent of earners begins roughly at $500,000 a year.) Collins has also opposed repeal of the estate tax in the past, unlike the GOP framework. But she said she’s ready to begin the debate.

“I actually think it’s possible to put together a bipartisan bill,” Collins said. “I don’t know a single American who likes the tax code.”

Still, the prospects for bipartisanship appear slim. In the end, not a single Democrat voted for the final budget measure.

On individual amendments, however, there were a few exceptions. Senator Heidi Heitkamp of North Dakota voted with Republicans to reject an amendment prohibiting tax breaks for the top 1 percent of earners. Senator Joe Manchin of West Virginia voted to adopt a GOP amendment that called for reducing the state and local tax deduction.

Both Democrats face re-election next November in states President Donald Trump won handily in 2016, and they’re seen as his likeliest sources of bipartisan support.

‘Poison Pill’

But both senators gave themselves an exit by voting for Heitkamp’s amendment to guarantee that nobody making less than $250,000 get a tax hike. She said it’s “essential” to draw “an absolute bright line” against that prospect. Nonetheless, 51 Republicans shot her measure down after Senate Budget Chairman Mike Enzi called it a “poison pill” that would “inappropriately bind the Finance Committee’s work on any tax legislation.”

The White House and GOP leaders have refrained from categorically promising that no middle class Americans will see a tax hike, arguing that there may be exceptions to the broad tax cuts they aim to provide. Some experts have said ending the state and local tax break and personal exemptions could raise taxes on big families in high-tax states.

Democrats also voted unanimously for an amendment to prevent tax legislation from adding to the deficit. Republicans banded together to reject it; their budget measure allows tax changes to add up to $1.5 trillion in new deficits over a decade.

Having failed to repeal Obamacare, or build a border wall, or get going on an infrastructure package, Republicans are feeling enormous pressure to succeed on taxes.

“There’s a real consensus among our members that this is something we have to deliver on,” said Senator John Thune of South Dakota, the third-ranking Republican. “It’s unfortunate we didn’t get a result on health care.”

— With assistance by Erik Wasson

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