Finding tax bill votes. The Senate Budget Committee OK’d the Tax Cuts and Jobs Act for a floor vote that could come this week. Two GOP senators who had been skeptics, Bob Corker and Ron Johnson, voted to send the bill to the floor. Meanwhile, the Republican leadership continues to search for additional votes. Lisa Murkowski wants Congress to allow drilling in the Arctic National Wildlife Refuge. Susan Collins wants a promise that Congress will vote on a bill to restore cost-sharing subsidies under the Affordable Care Act. And those “mathematical” changes desired by President Trump could help his own business interests considerably: They include increasing a tax deduction for pass-through entities. Both Johnson and Steve Daines say they’ll oppose the TCJA without more generous tax cuts for pass-throughs.
Pulling a trigger. Corker, for his part, secured a commitment that the bill would automatically increase taxes if future revenues do not reduce deficits as the bill’s sponsors promise. Ted Cruz has proposed automatic tax cuts if growth surpasses estimates. TPC’s Bill Gale thinks Cruz will have to wait a while. And the conservative group Freedom Partners, backed by the Koch brothers, told Politico that, “it's hard to imagine a more counterproductive policy” than tax triggers.
More about that growth: There could soon be a JCT score of the Senate TCJA. The Joint Committee on Taxation tells top Senate Finance Committee Democrat Ron Wyden that it may have a dynamic score of the bill as early as tonight. But it wouldn’t include any late—and likely—changes to the bill. The big question: What economic growth assumption will JCT use?
Repeal of the ACA’s individual mandate will likely be in a final tax bill. The provision wasn’t in the House version but the Associated Press reports that that Ways & Means Chairman Kevin Brady says the House would ultimately accept the politically risky move. Trump told GOP senators yesterday that he supports the ACA stabilization bill proposed by Senators Lamar Alexander and Patty Murray as well as $9 billion in future reinsurance funding—as long as the tax bill includes a repeal of the ACA’s individual mandate.
And what about jobs? TPC’s Steve Rosenthal explains why “contrary to the claims of President Trump and congressional supporters, the [TCJA] may still encourage US companies to shift production overseas.” TPC Leadership Committee chair and MIT lecturer Bob Pozen concurs, writing for The Financial Times, "If Congress adopts [this] system for corporate taxes, it needs effective guard rails to prevent US multinationals from moving more jobs and factories overseas."
What would Reagan do? TPC’s Len Burman recalls how President Reagan shepherded tax reform in 1986 and questions the path chosen by the current administration and Congress. Reagan, Len writes, “used his position to enact a durable tax reform. It took time and a lot of hard work. President Trump and Congress think they can do it much, much faster with very little deliberation or debate. They might be able to pass something that way, but it won’t be reform and it won’t last.”
What good is December without budget brinksmanship? The President was supposed to meet yesterday with Speaker Paul Ryan, Senate Majority Leader Mitch McConnell, and congressional Democratic leaders Nancy Pelosi and Chuck Schumer to work out a deal to keep the government open after next week. But hours before the session, Trump tweeted that there would be “no deal” to avert a government shutdown. So “Chuck and Nancy” ditched the meeting, saying they’d try to work out a budget agreement directly with congressional GOP leaders. Trump’s response: a photo-op to bash the Democrats. But Trump and Hill Republicans will still need Democratic votes to keep the government open.
How to build a state budget. To help sort through the web of state budget processes, TPC’s State and Local Finance Initiative has highlighted chapters from its comprehensive review of state budget practices. Each section describes current budgeting practices across the states and evaluates evidence on the efficacy of specific measures. The interactive guide will help readers understand state budget rules and whether they meet the needs of their residents while preparing for the future.
The tax policy community has lost a friend. Chris Bergin, the long-time president and publisher of TaxNotes, died suddenly on November 22. He was 65. Chris was a passionate advocate for transparency in tax policy who demanded the IRS share information with the public. At the same time, he also argued that Congress should give the agency sufficient funding to do its job. He is survived by his wife, Ulrike, and two children. A public wake will be held at Murphy's Funeral Home in Falls Church, VA, on December 1, from 10 am to 3 pm.
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