House Tax Reform Cut Senate

Forget the Senate: Tax Reform Will Be Hard Enough in House

The Senate, with its narrow Republican majority and arcane, anti-majoritarian rules, draws most of the attention when it comes to the difficulty of passing legislation.

But but last week’s close vote in the House of Representatives serves as an important reminder that tax reform faces stiff obstacles in the lower chamber as well.

House Republican leaders had planned to unveil tax legislation Wednesday but pushed it back to Thursday. The legislation would cut and reduce tax brackets for individual filers, reduce corporate taxes and eliminate the estate tax. The White House has said it wants President Donald Trump to be able to sign a bill by the end of the year.

The House last week adopted the Senate's budget resolution, paving the way for the tax bill. But 20 Republicans defected on the budget, cutting the margin to just four votes.

Opposition came from two groups — members of the House Liberty Caucus and other deficit hawks, and lawmakers from high-tax states upset over proposals to eliminate a break that lets taxpayers deduct state and local taxes on their federal tax returns.

Representatives from the states of New York and New Jersey cast 11 of the "no" votes; a 12th came from Rep. Brian Fitzgerald (R-Pa.), who represents a district where the deduction is worth more than the national average. Other representatives who voted "yes" on the budget might feel pressure to oppose the tax legislation itself. Every Republican from California, for instance, voted for the budget.

House leaders have tried to win over some reluctant members by floating the possibility of keeping the deduction on property taxes but cutting it for other state and local levies.

Rep. Leonard Lance (R-N.J.), who voted against the budget last week, reacted cautiously to the proposal Tuesday.

"I am going to continue to fight for retention of SALT [state and local taxes] in its entirety," he told CNN. "This is a work in progress, and I haven't seen any work product, which will be unveiled tomorrow."

Meanwhile, the Liberty Caucus issued a statement after last week's budget, blasting the majority's willingness to pass massive tax cuts without corresponding spending cuts.

"Passing a budget that doesn't address out-of-control spending and adds trillions of dollars to the national debt just to achieve some policy goal — which also could be accomplished with a responsible budget — is an endorsement of a warped worldview where the end justifies the means," the statement reads.

Rep. Justin Amash (R-Mich.), the chairman of the caucus, also is no fan of the state and local tax deduction. Responding to a pronouncement by New York Gov. Andrew Cuomo that eliminating the tax break would "destroy" the state, Amash tweeted: "Governor, why should taxpayers across the United States be forced to subsidize your state's high-tax/high-spend regime?"

Potential Obstacles
Republicans who opposed budget
RepresentativeSALT*
Rep. Justin Amash (R-Mich.)$1729
Rep. Ken Buck (R-Colo.)$3107
Rep. Dan Donovan (R-N.Y.)$6352
Rep. John Duncan (R-Tenn.)$1153
Rep. John Faso (R-N.Y.)$4345
Rep. Brian Fitzpatrick (R-Pa.)$5478
Rep. Matt Gaetz (R-Fla.)$2268
Rep. Lynn Jenkins (R-Kan.)$1671
Rep. Walter Jones (R-N.C.)$1784
Rep. John Katko (R-N.Y.)$3610
Rep. Peter King (R-N.Y.)$6671
Rep. Leonard Lance (R-N.J.)$13626
Rep. Frank LoBiondo (R-N.J.)$4142
Rep. Tom MacArthur (R-N.J.)$6181
Rep. Thomas Massie (R-Ky.)$870
Rep. Mark Sanford (R-S.C.)$3513
Rep. Chris Smith (R-N.J.)$8223
Rep. Elise Stefanik (R-N.Y.)$2358
Rep. Claudia Tenney (R-N.Y.)$2499
Rep. Lee Zeldin (R-N.Y.)$8641
*Average deduction for state and local taxes. U.S. average: $3598
Source: IRS

It all adds up to the potential for a drama-filled tax vote, according to Rick Manning, president of Americans for Limited Government. He said it will be hard for fiscal conservatives to swallow more red ink in the face of an unwillingness to enact spending cuts.

"It's going to be a real struggle to get them on a path to get a trillion-dollar deficit this year," he said. "And we won't even have to breathe hard to get there."

But Grover Norquist, president of Americans for Tax Reform, said he is confident that the House — and the Senate — will pass tax reform.

"They will do what they need to do to get a bill passed while maximizing the most pro-growth aspects," he aid.

That is not to say the process will not play out in a bumpy fashion, with ups and downs, Norquist said.

"It's going to be one of those things when it's like a roller coaster," he said.

Norquist noted that the House Freedom Caucus, which often has frustrated House leaders, backed the budget. He said he believes conservatives in the House recognize they made a tactical error during the failed attempt to repeal Obamacare when they criticized the bill through the entire process. Senators took flak from the Left for two months, helping to kill the effort.

Norquist said he thinks the final vote on the tax legislation will be close. But he said congressmen who insist on perfection will be shut out.

"At the end of the day, there'll be 20 guys outside the fence screaming," he said. "The trick is they need you … What will be interesting is to see who will be outside the fence who didn't mean to be."

Manning called on Trump to lay down clear markers and insist on meaningful spending cuts. And the House should not ignore what might happen in the Senate, he said.

"The House needs to worry about what the House is going to do … the House needs to pass the best tax cut possible and let the Senate do what the Senate's going to do."

It may come down to primaries, Manning said. Moderate Republicans hearing footsteps from the Right may vote for a more conservative bill than they ordinarily would. He said moderate holdouts should be targeted in primaries.

And he rejected the argument that such a strategy puts the Republican majority at risk by nominating candidates too conservative to win in centrist districts.

"They get nothing done now," he said. "So that argument doesn't work. These are the same people who said you had to vote for Jeb Bush because Donald Trump couldn't win."

Story updated Nov. 1, 2017 at 12:25 p.m. to reflect a change in the date Republican leaders will introduce legislation.

Last Modified: November 1, 2017, 12:37 pm

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