WASHINGTON ― Republicans say their tax reform bill will benefit middle-class families. But the new version of their legislation in the Senate actually lets almost all of the individual income tax cuts expire in 2025.
Meanwhile, the heart of the plan ― a reduction in the top corporate tax rate from 35 percent to 20 percent ― would still be permanent in the Senate bill.
The last-minute change, unveiled by Senate Finance Committee Chairman Orrin Hatch (R-Utah) Tuesday night, was made to comply with Senate rules that forbid certain legislation from adding to the federal budget deficit after 10 years. Those rules, dictated by a process known as reconciliation, would allow Republicans to pass their bill with a simple majority instead of with 60 votes.
In short, Republicans were forced to alter the bill in order to more easily pass their tax cuts. In doing so, however, they weakened the talking point that the plan would primarily benefit the middle class.
Democrats were quick to cite the change as evidence of a double standard.
“Nothing highlights what this plan is truly all about more than the fact that its tax cuts for massive corporations are permanent, while the middle class gets crumbs that last only a few years,” Sen. Patty Murray (D-Wash.) said in a statement.
Republicans countered by arguing that individuals and corporations alike could receive a permanent tax cut if Democrats agreed to work with them outside the reconciliation process.
“There’s a simple solution. If our Democratic colleagues work with us to get 60 votes,” Sen. John Cornyn (R-Texas) said during a Finance Committee markup hearing on Wednesday, “we could make it permanent.”
In reality, though, Republicans never attempted to work in a bipartisan fashion on tax reform in the first place. They similarly eschewed trying to reach a bipartisan consensus on health care this summer. In that effort, they failed to bring 50 Republican senators on the same page to repeal Obamacare.
So why do corporations deserve a permanent tax cut under the Senate bill, but individuals do not?
Republican senators on Wednesday said the problem stemmed from the rules they’d imposed on themselves at the beginning of the process. Others insisted that cutting corporate taxes would benefit individuals in the long run anyway.
“Let me correct one thing,” Sen. David Perdue (R-Ga.) told HuffPost. “Individuals own corporations. So the best benefit that I can give the American worker is to make an American corporation competitive with the rest of the world. That’s what this is about.”
Sen. Tim Scott (R-S.C.) argued that permanent tax cuts would indirectly benefit consumers by lowering prices, increasing employee wages and encouraging investment.
“To try to create an argument between two sides of the ledger, when in fact the only side that pays the tax is the individual, is at least insincere, if not just completely wrong,” Scott told HuffPost.
Asked why middle-class families would only get temporary tax relief under this bill, Sen. Lindsey Graham (R-S.C.) said it’s “probably [because of] the way the rules are.”
Sen. Jerry Moran (R-Kansas) said he hoped individuals and corporations would both receive a permanent tax cut, but he didn’t have an answer as to “why there would be a disparity between” the two groups in the Senate bill.
The GOP’s efforts to pass tax reform hit a speed bump Wednesday afternoon after Ron Johnson became the first Republican senator to publicly announce his opposition to the current Senate bill. The Wisconsin Republican said the legislation unfairly benefits corporations more than other types of businesses.
“If they can pass it without me, let them,” Johnson said in an interview with The Wall Street Journal. “I’m not going to vote for this tax package.”
Johnson similarly opposed the effort to repeal Obamacare early on, though he ultimately voted for a bill to rescind the law.
Sen. Bob Corker (R-Tenn.), who is being closely watched over his concern about the enormous cost of the bill, argued Wednesday that businesses deserve a permanent tax cut because they generate economic growth.
“The personal side, candidly, does not,” Corker told reporters.
Corker, who is not seeking re-election next year, brushed off concerns about the political implications of making tax cuts temporary for the middle class.
“But I understand,” he added, “what the other side is going to do with that. They’ve already given me their slogan, and I understand it’ll be messaged in a very different way on the other side.”