Republican negotiators on the verge of announcing tax plan deal
A stunning election loss isn’t changing the trajectory of the GOP tax overhaul effort — in fact, it may actual sharpen the desire to move things quickly, according to several Republican aides.
Prime example: Republican negotiators are on the verge of locking in a deal on a final bill. It hasn’t been painless, and there were skirmishes going on late into Tuesday evening, but according to several people involved in the process, they are right there after either nailing down, or at least significantly narrowing, nearly all of the biggest outstanding issues.
Bottom line: Several sources involved in the process say Republicans may lock in their final deal as soon as early Wednesday.
Republicans are unlikely to release actual paper on the deal until Friday — they are now putting the numbers into legislative text and circulating pieces of it to the Joint Committee on Taxation for full scoring. Expect to see the bill Friday, when Senate Majority Leader Mitch McConnell files it for floor consideration Monday. The House would then vote Tuesday. President Donald Trump would sign the bill December 20.
This timeline remains subject to change, aides caution.
How they got here: Negotiations, and lengthy ones. House and Senate Republican negotiators have ping-ponged proposals back and forth the past few days. But after days of clear differences — and some parochial disputes about preferred provisions from each chamber’s bill — “it was time to deal,” one aide told CNN. “Everyone knew the timeline we were working under, and the time came to actually hammer this out.”
But still: Multiple aides caution that there’s work to be done and plenty of potential flare-ups that may come in the next few days.
Keep in mind: Senate rules — and the ability to get the bill, in its entirety, through the reconciliation process — will both make the process longer and create hiccups, hurdles and roadblocks in the days ahead.
Will the Alabama Senate race result effect the tax bill? Barring some kind of epic legislative collapse: no.
Now, Democratic aides say they will almost certainly call on Republicans to hold off on their plan until Senator-elect Doug Jones is seated, likely sometime early next month. But multiple Republican aides say that absolutely won’t happen — in fact, it may speed things up.
“Full speed ahead,” one senior GOP aide said.
“Our schedule was never predicated on this election — either way,” another said.
And finally: “No” was the one word response of one person deeply involved in the talks, when asked if the Jones win would change anything.
But wait — why have a conference meeting after a deal is (nearly) struck?
The conference meeting Wednesday is not substantive. It will be an opportunity for both sides to give lengthy statements about the merits or drawback of the Republican plan, but it is the furthest thing from an actual legislative session. Because the work on that front has almost been completed already.
The President’s message: Capitol Hill Republicans have long had a mixed view of the President’s role in this — they often gripe that he hasn’t done nearly enough to help sell the bill. But they also are wary of him getting too deeply involved and causing problems in a process that is clearly on the way to passage. On Wednesday, they’ll get the former and hope to avoid the latter, as the President makes his final pitch to the nation on his tax plan.
CNN’s Liz Landers has the full rundown of what to expect from the 120-person event set to take place in the Grand Foyer of the White House.
An important caveat here: Senate and House negotiators were still on the Hill late into Tuesday night trying to hammer out details. With that in mind, here’s where things were heading, according to several people involved who spoke to CNN:
* Corporate rate: Would move to 21% from 20%. This has long been viewed as a red line of sorts, and several senators were not amenable to this idea. But the siren’s song of the approximately $100 billion in revenue that one point increase would proved was inching toward winning the day.
* Corporate Alternative Minimum Tax: Part of the reason they need the revenue? The removal of the corporate AMT, which was included in the Senate bill, much to the horror of corporate America, which has been very worried about the effect of the move on the Research and Development tax credit and the municipal bond market.
* Individual top rate: Would move to 37%, from 38.6% in the Senate bill, 39.6% in the House. This would be done for two reasons — Trump has been agitating for the top rate to drop (over the objections of many message conscious Capitol Hill Republicans). Second, dropping the top rate provides additional help for high-tax state individuals who would be hit by the repeal of the state and local tax deduction (minus the property tax deduction capped at $10,000).
* The tax rate for pass-through income: The Senate proposal is winning out here, but scaled back a bit. The pass-through deduction would be moved to 20%, from 23%. Part of the reason this might fly with GOP senators who pushed for 23%, like Sen. Ron Johnson of Wisconsin, is the lowered individual rate. Remember, pass-throughs are business entities like s-corporations, partnerships etc. that pass their business income to the individual side and as such, pay the individual rate.
* Individual Mandate: This would be repealed. There wasn’t much question here. But there it is.
* Mortgage interest deduction: The House dropped the deduction to $500,000 (from the current level of $1 million). The Senate left the current deduction intact. The compromise here — which CNN has reported before — is to meet in the middle, at $750,000. That’s where they appear to have ended up.
* The deduction for state and local taxes: This is still up in the air. The reduced individual rate, should it hold, is helpful here for negotiators looking to ease the hit on high tax states. But California House Republicans, who voted largely “yes” on the House bill, have been asking for more — primarily expanding the property tax deduction to include income. It’s unclear whether those efforts will make any more headway (or if GOP leaders are simply tapped out when it comes to revenue to pay for what would be a very expensive change).
About that corporate rate:
At least one Republican senator is not enthused about the idea.
“20.94% Corp. rate to pay for tax cut for working family making $40k was anti-growth but 21% to cut tax for couples making $1million is fine?” Florida Sen. Marco Rubio tweeted Tuesday.
Remember: Rubio and Sen. Mike Lee proposed boosting the refundability of the child tax credit, and would pay for it by bumping the corporate rate up to just a shade under 21% (20.94% to be exact.) Republican leaders dismissed it, in part by saying they weren’t willing to budget the corporate rate. Well, that’s apparently out the window. But will Rubio actually vote know? One GOP source deeply involved in the process said bluntly: “No.”