The Republican tax plan is in trouble

As the House moves forward, the situation in the Senate is precarious.

Sen. Susan Collins, R-Maine, is surrounded by reporters as she heads to go vote on Capitol Hill in Washington, Tuesday, Nov. 7, 2017. (AP Photo/Susan Walsh)
Sen. Susan Collins, R-Maine, is surrounded by reporters as she heads to go vote on Capitol Hill in Washington, Tuesday, Nov. 7, 2017. (AP Photo/Susan Walsh)

Republicans desperately need to pass tax reform. After multiple failed attempts at repealing and replacing the Affordable Care Act, Republicans in Congress have to prove they can get something done, especially when their party controls the White House and both chambers of Congress.

On Wednesday, Senate Republicans announced they will attempt to repeal the individual mandate that requires Americans to be covered by health insurance in order to pay for the massive corporate tax cut — a cut that will ultimately primarily benefit wealthy individuals and not the middle class.

This, however, is a risky move that may be off-putting to some Senators.

Sen. Susan Collins (R-ME), for example, was a key vote during the health care battle, ultimately voting against the multiple Republican efforts to repeal and replace Obamacare. Collins’ staff presented her with research that shows the proposed tax cuts, paired with the individual mandate repeal, would be detrimental to middle class families.


“I have data that demonstrates for certain middle-income individuals and couples, who do not qualify for subsidies under the ACA … that the premium increase will outweigh the tax cut that they get,” Collins told reporters on Tuesday. “I suspected this, based on what I know about insurance markets, but now I have the actual data.”

Other Senators, including Sen. Ron Johnson (R-WI) have said they won’t vote for the bill in it’s current form.

Johnson, a former small business owner himself, is concerned the Senate bill doesn’t do enough for current small business owners, who are taxed at their individual income rates. This issue is addressed in the House tax bill, but it creates a massive loophole for hedge-fund owners and other wealthy “small business” owners. Johnson told CNBC Thursday that the even the House version doesn’t go far enough for his liking.

“We can’t leave anybody behind, which is why they came up with the 25 rate for pass-throughs,” Johnson said. “The problem is, neither the House or the Senate version really honored that commitment to pass-through businesses, which I argue are a huge engine of economic growth.”

Deficit hawks like Sen. Bob Corker (R-TN) have expressed a hesitancy to back the bill over concerns on how it would effect the federal deficit. The Joint Committee on Taxation has reported the Senate version of the bill would cost $1.4 trillion dollars over the next decade.


Corker told the New York Times Wednesday evening, “If I believe it’s going to add to the deficit, I’m not going to vote for it.”

With 52 Senators, Republicans only have a slight majority. Majority Leader Rep. Mitch McConnell (R-KY) can only afford to lose two votes, with Vice President Mike Pence breaking the tie in the event of a 50-50 vote.

The latest analysis of the Senate plan from the Joint Committee on Taxation finds that middle class families will actually experience a tax hike, while wealthy individuals will get a tax cut. This analysis, however, leaves out estate tax cuts and the individual mandate repeal — both of which would make the chart more regressive.

The House is expecting to move forward with a vote on their version of the tax bill on Thursday.