If there was one part of the GOP tax framework President Donald Trump was adamant about, it was a 20 percent corporate rate.
House and Senate Republicans, however, decided today they aren’t so set on it.
Republicans in both chambers have reportedly reached an agreement on the final version of the bill, which includes a 21 percent corporate tax rate. The change in the corporate tax rate will help pay for lowering the top individual tax rate from 39.6 percent to 37 percent, a provision that would benefit millionaires.
— Corporate rate bumped to 21 percent
— Top individual rate lowered to 37 percent
— Mortgage interest deduction capped at $750K
— Deduction for pass-through companies set at 20 percent https://t.co/84Qho4b2In
— Scott Wong (@scottwongDC) December 13, 2017
At one point, Republicans were so set on a 20 percent corporate tax rate, that while the Senate was in the throes of negotiations two weeks ago, the party collectively struck down an amendment that would have actually provided marginal middle class tax relief to a tax bill that overwhelmingly benefits the wealthy.
Under the current proposed Senate bill, the child tax credit is expanded to $2,000, but isn’t refundable, meaning lower-income families who don’t make enough for income taxes and instead pay only payroll taxes wouldn’t qualify for the full tax credit, with many only receiving an additional $75 per child annually. The amendment written by Sens. Marco Rubio (R-FL) and Mike Lee (R-UT) proposed lowering the level of income at which the tax credit kicks in, extending the benefit to more lower-income families. Rubio and Lee suggested raising the corporate tax rate two percentage points in order to pay for the change, which would have cost around $70 billion dollars.
Republicans voted the amendment down on a procedural vote of 29 to 71, citing the White House’s firm position on a 20 percent corporate tax rate.
Rubio, still frustrated from the defeat of his child tax credit expansion, responded on Twitter.
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?
— Marco Rubio (@marcorubio) December 12, 2017
Earlier in the week Rubio warned there are “going to be problems” if the conference committee weakens the tax credit in any way.
— Marco Rubio (@marcorubio) December 8, 2017
He repeated his criticism shortly after the deal was announced.
Rubio reacts to reports of tax deal that would lower top individual rate: “If you make $40,000, we can't find the money to increase the child tax credit, but if you make a million a year we can?”
— Joseph Lawler (@josephlawler) December 13, 2017
Rubio is not necessarily known for bucking the establishment, but it will be interesting to see if he provides any resistance to the GOP’s plan to move forward on a tax plan that barely delivers any tax relief to the working and middle class.
For Trump and other White House officials, the 20 percent corporate tax was essential in delivering the growth they had promised. Drastically cutting the rate 15 points, however, has been shown to be ineffective in spurring job creation. It’s also expensive, costing nearly one trillion dollars, according to the non-partisan Joint Committee on Taxation.
Even with this tax cut at the center of their tax plan, the growth estimates still aren’t there, with the administration’s own analysis refuting their popular talking point that the $1.5 trillion dollar tax plan would pay for itself through growth.
There are a number of other disputes that could prevent the GOP tax plan from becoming law just yet. Some senators, including Susan Collins, (R-ME), Jeff Flake (R-AZ), and Bob Corker (R-TN) have all mentioned various problems with the legislation that would keep them from voting on it.
Now that Democrats have gained another seat from the Alabama special election Tuesday night, the party is pushing for Doug Jones to be seated immediately, making the GOP’s path to overhauling the tax code much more difficult.