PD Editorial: The rush is on to pass a bad tax bill
A showdown vote on the tax bill seems inevitable before Congress goes home for Christmas.
Suddenly, however, its prospects may be less certain.
Republicans are desperate to deliver a legislative victory on something before the end of the year, and approval of a tax bill seemed assured Wednesday as GOP leaders in the House and Senate presented a package filled with holiday gifts for corporations and the wealthy and smaller lumps of coal for the middle-class and poor.
However, it would take just three no votes in the Senate to scuttle the bill. And, as of Thursday, three Republican senators — Bob Corker of Tennessee, Mike Lee of Utah and Marco Rubio of Floria — described themselves as undecided or opposed, and two others — Thad Cochran of Mississippi and John McCain of Arizona —had health issues that potentially could prevent them from voting next week.
Why not wait? Postponing the vote could complicate matters even further, as newly elected Sen. Doug Jones of Alabama is expected to take his seat by the end of the month, switching another vote to the no column.
Here’s a better question: Why not start over and try to produce a bipartisan bill that closes loopholes, expands the base and reduces rates without blowing up the deficit or pitting the poor and middle class against the wealthy?
In reconciling the House and Senate bills passed this month, negotiators didn’t split the difference on the highest marginal income-tax rate. They did the limbo, going lower than either the House (39.6 percent) or Senate (38.5 percent) to set a new top rate of 37 percent.
Those, including the president, who receive pass-through income from hedge funds and real estate ventures, will receive a 20 percent deduction.
Congressional leaders have yet to say whether they will maintain the tax deduction for personal casualty losses suffered in wildfires as requested by California lawmakers.
They did, however, make two adjustments that would ease the blow for residents of California and other, mostly blue, states with high taxes and expensive housing:
The limit on the mortgage interest deduction was set at $750,000 (up from $500,000 in the House bill). The present limit is $1 million.
Taxpayers would be allowed to deduct up to $10,000 in state and local taxes or property taxes vs. a Senate bill that allowed only a deduction for property taxes, which would be of limited value in California where property taxes are kept low by Proposition 13.
Still unexplained, and perhaps incomplete, is a final act of accounting magic.
Under arcane Senate budget rules, the tax legislation can pass on a simple majority — that is, without a single Democratic vote — as long as it doesn’t add more than $1.5 trillion to the budget deficit over the next 10 years.
To get there, the original bill ended middle-class tax relief after eight years. On Thursday, Senate Republicans said that might be changed to seven years.
They are, of course, counting on a future Congress to make the cuts permanent, relieving themselves of responsibility for the deficits that would follow — or any need to negotiate for Democratic votes on a tax bill that, as it stands, deserves to be soundly defeated. That would be a gift to anyone who wants legitimate tax reform.