Senate littered with tax reform land mines

The fanfare surrounding the House GOP tax plan on Thursday masked a brewing storm in the other chamber.

Senate Republicans will have to sway a host of GOP swing votes as they try to jam through their own tax overhaul with almost no margin for error. Fiscal hawks are squawking about how tax legislation could balloon the deficit. Moderates like Sen. Susan Collins of Maine are worried tax cuts will disproportionately favor the rich. Even an Obamacare-related row could bubble up and trip up passage.

While a small handful of Democrats might get on board, it’s more likely Republicans will have to go it alone — meaning they can lose just two GOP votes before their tax bill tanks. Here’s a look at the groups of Republican senators that Majority Leader Mitch McConnell and the Senate’s chief tax writers will have to satisfy to get a bill through their chamber:

The deficit hawks: Bob Corker, John McCain, Jeff Flake

Of this trio of deficit hawks, only Sen. Bob Corker of Tennessee has flatly declared that he would reject a tax bill if it added even a cent to the deficit. But Sens. John McCain and Jeff Flake — two independent-minded Arizonans unafraid to buck their party — are starting to make more noise about the tax bill’s red ink.

McCain voted against the Bush tax cuts in 2001 and 2003 in part because of their impact on the deficit.

“The deficit went up,” McCain now notes. “Guess what? I was right.” (McCain, to be sure, is typically less deficit-minded when it comes to the Pentagon’s budget.)

Newly unencumbered by reelection concerns, Flake has been increasingly warning against simply passing tax cuts — though he’s not prepared to reject any deficit-boosting bill just yet. He recalled how he was inundated with a flood of pushback from the alpaca lobby when he pointed out in a recent report that some taxpayers can claim alpaca as livestock for tax breaks.

“There is a reason for every credit, deduction, loophole in the code,” Flake said. “There’s a reason we haven’t done meaningful reform in over 30 years. And it’s gonna be tough, but we’ve got to do reform, not just tax cuts. Everything ought to be on the table.”

Indeed, these aren’t the senators who are privately lobbying the Senate Finance Committee to keep certain pet deductions. Corker stresses that tax writers need to find $4 trillion in loophole closings and make the new tax rates permanent to make a tax reform truly substantive.

“To do it right, you gotta cut out so many provisions that are there,” Corker said. “I don’t want to be one of those people, like so many people who come to see us and say, ‘I’m all for tax reform, but this is one provision that I don’t want changed,’ which is everybody in the world.”

 

 

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