The conference committee has barely started, and the GOP tax bill already has some big problems
- The GOP tax bill is headed to a conference committee to hash out differences between the Senate and House plans.
- There are already issues forming, as Senate and House members have begun requesting various pet projects be included in the final bill.
Republicans are closer than ever to turning their massive tax reform dream into reality, but they have run into some early snags in the process of attempting to unify their legislation.
The Tax Cuts and Jobs Act (TCJA) is headed toward a conference committee to work out differences between the House and Senate versions. But already, some potential sticking points have begun to emerge.
Senators may not get what they were promised
The biggest concern for Senate Republican leaders: Sen. Susan Collins of Maine.
Collins voted for the first iteration of the TCJA because it included an amendment she wrote - as well as a guarantee that a bipartisan Affordable Care Act stabilization bill would at the least get the leadership's support.
While Collins got the guarantee from Senate Majority Leader Mitch McConnell, House Speaker Paul Ryan has said he was not included in that agreement, potentially throwing Collins' support into question.
"I wasn't part of those conversations," Ryan told reporters about the agreement. "I'm not deeply familiar with those conversations."
Ryan did appear to warm up to the idea of bringing the so-called Alexander-Murray bill to the House floor for a vote on Thursday. But strong opposition to the bill among House conservatives could sink the measure regardless of the leadership's support.
Collins' vote may not technically be needed for the bill since only one Republican voted against it as it passed the Senate (Bob Corker of Tennessee). The GOP can afford to lose two votes and still pass the legislation.
But the issue could become exacerbated if another senator has qualms with the legislation. Enter Sen. Marco Rubio.
"If #TaxReform conference weakens #ChildTaxCredit OR reduce corp cut but don't make CTC refundable for working families, going to be problems," Rubio said in a Friday tweet.
Rubio has been fighting to make the child tax credit more generous throughout the process. The Florida Republican tried to pass an amendment to make the credit, which was bumped up to $2,000 in the Senate bill, refundable up to a certain level. His amendment was defeated.
But the House bill only increased the credit to $1,600, leaving open the possibility that the compromise legislation could make the credit less generous.
GOP leaders are also considering cutting the corporate tax rate to 22% from the current 35% instead of the 20% proposed in both the House and Senate bills. The tweak would help pay for fixes to errors in the bill and other priori tes.
Rubio said some of the newly raised revenue from a less generous corporate rate cut should go toward the child tax credit. The amendment Rubio introduced would have bumped up the corporate rate to 20.96% to pay for the refundable nature of the credit.
Rubio did not threaten to pull his vote in favor of the original version of the TCJA, even after the vote on his amendment failed.
Marc Short, the White House legislative director, told reporters after Rubio's tweet Friday: "Senator Rubio's going to be fine."
House members may get defensive about changes
A letter from 53 GOP House lawmakers urged Republican leadership to make sure that the estate tax (which conservatives call the "death tax") is totally repealed in the final bill.
The Senate version of the legislation would increase the threshold at which the tax applies to roughly $11 million from the current $5.6 million, but it would not fully repeal the tax. And like all individual tax changes in the Senate bill, the threshold increase would expire after 2025.
"We are concerned about the current Senate plan, which falls short of the long term Republican goal by providing only temporary relief whole leaving the death tax in place," the letter said.
Also on the House side, many members are fighting for a more generous state and local tax (SALT) deduction. Both the House and Senate bills would allow people to deduct $10,000 in state and local property taxes. House Republicans from high-tax states that use the SALT deduction heavily, like California and New York, want the $10,000 limit to apply to state and local income tax, as well.
Gary Cohn, the National Economic Council director and Trump's top economic adviser, said Friday White House and leaders are open to a SALT deduction change in the final bill.
Work by the conference committee is set to start on Saturday, Cohn said, and work on the compromise legislation could wrap up as soon as the following week.