Senate Votes to Begin Debate on Tax Overhaul

Senate Votes to Begin Debate on Tax Overhaul

WASHINGTON — The Senate moved closer to approving a sweeping overhaul of the tax code on Wednesday, voting to begin debate on the tax rewrite as Republican leaders continue trying to secure the votes for final passage.
The procedural vote, which passed 52 to 48, put the Senate on track for a final vote later this week.
The push by Senate Republicans to pass an ambitious tax rewrite now enters a critical and politically delicate phase. Republican leaders still lack firm commitments from enough of their members to ensure passage later in the week, and major provisions of the bill were still being debated on Wednesday.

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Among the biggest potential changes under discussion would involve nudging the corporate tax rate from the proposed 20 percent rate to 22 percent. Such a move would still result in a large cut from the current top rate of 35 percent, but would give lawmakers some additional money to use for other concessions necessary to win over reticent lawmakers.

The higher rate was floated on Wednesday by Republican Senators Marco Rubio of Florida and Mike Lee of Utah, both of whom want to use the money from a higher corporate rate to pay for an expanded child tax credit.
“It makes us just as competitive, but it allows us to do the pro-worker reform that we desperately need,” Mr. Rubio said.
Senator Lindsey Graham, Republican of South Carolina, expressed openness to a slightly higher corporate rate than the Senate had proposed.
“Failure is not an option,” Mr. Graham said when asked about raising the corporate tax rate to pay for other changes. “If you’ve got to go up a point or two to make it work, I’m fine with it.”

But the White House was not receptive.
“We do support the child tax credit,” said Raj Shah, a White House spokesman. “We also think it’s important to make businesses more competitive. We would not support raising the corporate rate as outlined in that amendment.”
Lawmakers were nearing agreement on other concessions, including sweetening the tax treatment for so-called pass-through businesses by boosting a tax deduction for owners of those businesses.
But an additional sticking point emerged in the form of how to guard against ballooning budget deficits, with some lawmakers pushing for automatic spending cuts.
As Republicans negotiate, they are encumbered by parliamentary rules that limit what provisions can be included in the bill. Another restriction: the final bill cannot cost more than $1.5 trillion over 10 years.

The measure’s prospects have nonetheless seemed on the ascent, as reluctant senators speak more positively about the overhaul.
Senate Republicans are using the same procedures to move the tax overhaul through the chamber as they used this summer to try to repeal and replace the Affordable Care Act. In that effort, Republicans succeeded in voting to start debate, just as they did on Wednesday, but they could not ultimately muster the votes to approve a repeal bill.

Graphic | How Every Senator Voted to Begin Debate on the Tax Bill The Senate will now begin a period of debate before a final vote on the plan.

To pass a tax bill in the Senate, Republicans will need the support of 50 of their 52 members, assuming no Democrats vote for the bill and Vice President Mike Pence breaks a 50-50 tie. The House already passed a tax package that differs substantially from the Senate’s version, so if the Senate can succeed in passing its bill, the two chambers would then need to reconcile the two plans.
But big changes could still be made to the Senate package in the next day or two. The Senate’s debate on the tax overhaul is limited to 20 hours, to be followed by a marathon series of amendment votes known as a vote-a-rama.

Two other Republican senators, Ron Johnson of Wisconsin and Steve Daines of Montana, have been unhappy with how the Senate plan treats so-called pass-through businesses, whose profits are distributed to their owners and taxed at individual income tax rates.
The current Senate plan allows pass-through owners to deduct 17.4 percent of business income as a way of lowering their tax rates. But Republicans now plan to boost the deduction to 20 percent, people familiar with the matter said.
Before Wednesday’s vote, Mr. Daines said that he had “seen enough progress to vote yes to move the debate forward,” alluding to the larger deduction.
“There has been some good progress for Main Street businesses in the tax cut bill,” he wrote. “I was able to secure more than $60 billion in tax cuts for Main Street businesses.”

Then there are Republican senators with concerns about ballooning the national debt, which has topped $20 trillion, a group that includes Bob Corker of Tennessee, Jeff Flake of Arizona and James Lankford of Oklahoma.
Mr. Corker said Tuesday that he had received a commitment for some kind of mechanism to be added to the bill that would raise certain taxes if projected economic growth falls short of expectations. And Mr. Lankford cited the trigger provision as he voiced support for the tax overhaul on Wednesday.
“I am on board with this bill, because I want to see the good economic growth that’s coming with it,” Mr. Lankford said on “CBS This Morning.”
The mechanics of such a “trigger” have not been laid out in detail, and some Republican lawmakers have reacted coolly to the idea. Conservative groups like Club for Growth and Americans for Tax Reform adamantly oppose the idea, saying it would undercut the economic growth by injecting uncertainty into the tax system.

However, the debate over a proposed “trigger” that would roll back tax cuts if revenues fall short of projections appeared to be shifting among Republican senators to a discussion over whether automatic spending cuts are the better way to go.
Mr. Graham said that some of his colleagues saw cuts to nonmilitary programs as preferable to rolling back the tax cuts if they do not bring sufficient economic growth. He said that Republicans are divided on the idea of a trigger and what it would affect.
Senator John Kennedy, Republican of Louisiana, who had expressed resistence to the trigger idea on Tuesday, said on Wednesday that he preferred the idea of an automatic spending cut.
Senator Bill Cassidy, the other Louisiana Republican, also appeared fond of the idea of using spending cuts as a safeguard in the bill.
“It’s intriguing, isn’t it?” he said.