live video


Tax split between House, Senate poses a big challenge

Published: Friday, November 10, 2017 @ 3:57 PM
Updated: Friday, November 10, 2017 @ 3:56 PM

The House and Senate tax overhaul plans are broadly similar, but crucial differences are creating headaches for Republican leaders determined to keep myriad interest groups and factions of the GOP satisfied. And then there's the ambitious timetable they've set of finishing in time to get legislation to President Donald Trump by Christmas.

The most politically challenging decisions involve dealing with popular and widely used tax deductions, structuring tax cuts for business and balancing personal income tax rates between middle-class families and the rich.

All of these decisions come against a generous — but firm — 10-year, $1.5 trillion cap on the measure's cost to the federal deficit. Both House and Senate have adopted accounting gimmicks to squeeze tax cuts that appear larger down to fit that restraint.

Trump's enormously expensive demand for a cut in the corporate tax rate to 20 percent — from the current 35 percent — is a big complication, as is unrest among House Republicans hailing from affluent suburban districts who are upset over the proposed loss of the deduction for state income taxes.

Here's a rundown on the major differences between the House and Senate bills:

INDIVIDUAL TAX RATES

The Senate measure keeps the current number of personal income tax brackets, seven, though it changes the rates to 10, 12, 22.5, 25, 32.5, 35 and 38.5 percent. That last top bracket for the wealthiest earners carries a higher rate of 39.6 percent under current law.

The House bill goes further toward simplifying the tax system. It shrinks the number of brackets from seven to four, with rates of 12, 25, 35 and 39.6 percent.

Lots of numbers here for congressional negotiators to play with, to move up or down.

The inheritance tax on multimillion dollar estates, called the estate tax, is an especially hot-button issue. Democrats point to the proposed GOP changes as proof that the Republicans are out to help wealthy people like Trump and his family.

Currently, when someone dies, the person inheriting the estate must pay taxes on its value above $5.5 million for individuals, $11 million for couples. The House bill initially doubles those limits and then repeals the whole tax after 2023. The Senate version doubles those exemption amounts — but doesn't repeal the tax.

To repeal or not to repeal? That may be the class-warfare question.

DEDUCTIONS

The Senate bill would eliminate a taxpayer's ability to deduct state income taxes and local property taxes. But the final bill may have to closely track a House compromise that provides a property tax deduction of up to $10,000 or else risk a revolt from GOP lawmakers from New York, New Jersey, and California.

The Senate bill preserves popular individual tax breaks for large medical expenses, mortgage interest, electric vehicles and college costs that were targeted by the House. The House limits deductibility of mortgage interest to the first $500,000 of a loan, riling the real estate and housing industries, and eliminates a deduction for medical expenses that's often taken by families facing crippling nursing home costs.

BUSINESS:

Both the House and Senate versions slash the tax rate for corporations to 20 percent from the current 35 percent. But there's a big twist: The Senate bill delays the rate cut for a year.

The delay was put in to reduce the bill's cost by $100 billion or so — but it's opposed by the White House and House Republicans. Wall Street hates it too. U.S. stock markets sold off Thursday in response to news of the proposed deferral, with industrial and technology stocks leading the decline, before recouping some of the losses by the close of trading.

Might the implementation delay be traded for a smaller corporate tax cut, something above 20 percent?

Trump actually had been demanding 15 percent and reportedly was initially furious at the 20 percent figure. The issue is setting the corporate rate at a level that experts and tax writers believe would bring the U.S. closer to its overseas competitors.

The electric car industry — notably makers Tesla and Chevrolet — and producers of wind power for generating electricity are losers under the House bill. The tax credit of up to $7,500 for plug-in electric vehicles would be repealed, and the credit for wind energy would be reduced. But the Senate version retains the incentives.

The loss of tax credits for renewable energy would free billions to help pay for the corporate tax cuts in the legislation. But in addition to environmentalists' objections, the prospect also angers some Republican senators, including powerful Chuck Grassley of Iowa, who has vowed to defend the credit.

There's a special rate for businesses whose profits are counted in the owners' personal tax returns. Millions of U.S. businesses use this "pass-through" format. The House bill taxes many of them at a maximum 25 percent, down from 39.6 percent currently, and adds a lower minimum rate. The Senate version would set a new 17.4 percent deduction for "pass-through" income, aimed to help smaller businesses.

Trending - Most Read Stories

Gulf grows between Trump and Congress on trade

Published: Saturday, June 23, 2018 @ 5:15 AM

As President Donald Trump this week threatened $200 billion in new tariffs on Chinese imports, and then warned Europe that he would slap a 20 percent tariff on imported automobiles, members of both parties Congress accused the administration of starting a trade war which could cause collateral economic damage across the United States.

The differences were on display at a hearing Wednesday with Commerce Secretary Wilbur Ross, who took a bipartisan tongue lashing on a recent round of tariffs levied on imported steel and aluminum from Canada, Mexico and Europe.

“We’re picking winners and losers,” argued Sen. Pat Toomey (R-PA), who said those tariffs were already hurting businesses in his home state.

“Probably resulting – in my view – in far more jobs being lost than being gained,” Toomey told Ross, citing a very well-known Pennsylvania company that could find it less expensive to move jobs from the U.S. to Canada.

Almost every Senator on the panel had a story of a small business that was feeling the pinch due to Trump Administration tariffs, impacting all sorts of agricultural products, as well as manufacturing, big and small.

“Do you think we’re in a trade war right now?” asked Sen. Maria Cantwell (D-WA). “Because I do,” as Cantwell rattled off farm products that were losing markets because of retaliatory tariff measures.

Ross downplayed the cost of higher imported steel and aluminum, basically making the case that economic hardships were being overplayed.

“It’s a fraction of a penny on a can of Campbell’s soup, it’s a fraction on a can of Budweiser, it’s a fraction on a can of Coke,” Ross said.

That did not please the Senator from the state of Coca-Cola.

“Although a couple of pennies on a can is not much, a couple pennies times a billion is lots,” said Sen. Johnny Isakson (R-GA).

“We’re hit harder than any other state by the Canadian retaliatory tariffs,” said Sen. Rob Portman (R-OH), warning the Trump Administration against tariffs on imported automobiles, as GOP Senators labeled such actions a tax on consumers.

“Steel prices are going up – not just for foreign steel subject to tariffs, but also for U.S. steel,” complained Sen. Orrin Hatch (R-UT).

“Mexico’s buying their wheat from Argentina and their corn from Brazil,” said Sen. Pat Roberts (R-KS), as he told Ross that Kansas wheat exports were encountering troubles because of new retaliatory tariffs on U.S. exports, bringing bad economic news on the farm report.

Ross simply told Senators if other countries put new tariffs on U.S. exports, that was out of his control.

“We have no control over what another country does in retaliation,” Ross said.

The bipartisan complaints clearly had no impact, as by Friday, President Trump was on Twitter, issuing new threats against European auto imports.

As Democrats registered their opposition, they also couldn’t help but note the oddity of a Republican President going against what’s been a bedrock belief of the GOP.

“I feel like I’ve gone down a rabbit hole,” said Sen. Clare McCaskill (D-MO), who said she found it hard to believe the party of free trade now had a President in office who was doing the exact opposite.

“In a chaotic and frankly incompetent manner, you’re picking winners and losers,” McCaskill told Ross.

But for the President, this is about re-setting trade deals, which he says were tilted against the United States.

“As far as trade is concerned with other countries, we want fair and reciprocal trade, we don’t want stupid trade like we had for so long,” the President said at a rally in Minnesota.

“Remember the world reciprocal,” Mr. Trump said. “We have been ripped off by almost every country on Earth, our friends and our enemies.”

“But those days are over,” the President said to cheers from the crowd.

But while they’re cheering Mr. Trump on the stump, at the U.S. Capitol, they’re worried about a trade war.

“We’re getting into a war that’s going to cost lots of billions of dollars,” Isakson warned.

Trending - Most Read Stories

House approves big, bipartisan bill to deal with opioid crisis

Published: Friday, June 22, 2018 @ 1:25 PM

In a fresh reminder that political cooperation is not dead on Capitol Hill, the House on Friday overwhelmingly approved a sweeping package of over fifty bipartisan bills to address the misuse of prescription opioid pain medicine, as lawmakers voted to expand a variety of services under Medicare and Medicaid to deal with the drug scourge.

“We can do things when we put partisan politics aside and work together,” said Rep. Gus Bilirakis (R-FL), one of a number of lawmakers who touted various provisions in the sweeping opioids measure.

“This particular bill, H.R. 6, is the crown jewel of all that legislation,” said Rep. Joe Barton (R-TX).

“This legislation will strengthen our efforts to advance treatment and recovery issues, and bolster the fight against deadly and illicit drugs,” said Rep. Rick Allen (R-GA).

“This is a big deal in the fight against the largest public health crisis in our country,” said Speaker Paul Ryan.

“Mr. Speaker, so often we hear about the partisan wrangling in Congress and clearly there are dividing lines on some high-profile issues,” said Rep. Steve Scalise (R-LA). “But this an issue where Republicans and Democrats have come together.”

The final vote was 396-14. The bill now goes to the Senate.

“Currently, Medicare doesn’t cover opioid treatment programs,” said Rep. Richard Neal (D-MA). “These bills are pieces of a large, complex puzzle. We need to find realistic solutions with long term outcomes.”

Trending - Most Read Stories

Trump: GOP should give up on immigration until after 2018 elections

Published: Friday, June 22, 2018 @ 7:29 AM

A day after Republicans in the House defeated one more conservative immigration reform plan, and delayed action until next week on a second bill because of a lack of GOP votes, President Donald Trump on Friday suggested a different avenue entirely – urging Republicans in Congress to drop the issue until after the November elections.

“Republicans should stop wasting their time on Immigration until after we elect more Senators and Congressmen/women in November,” the President tweeted early on Friday morning, saying the answer was simple – get more GOP lawmakers in the 2018 mid-term elections.

“Elect more Republicans in November and we will pass the finest, fairest and most comprehensive Immigration Bills anywhere in the world,” Mr. Trump pledged, as he blamed Democrats and the Senate rules, which would force him to get 60 votes to do what he wants on immigration.

Mr. Trump’s suggestion came as GOP leaders were still looking for a magic legislative formula on immigration reform, as the issue has divided Republicans in both the House and Senate.

The suggestion by the President that immigration efforts are a waste of time came as Republicans were trying to fine tune a second immigration bill in the House, with hopes of approving that next week, before lawmakers go home for a July Fourth break.

Many GOP lawmakers had been hoping that the President instead would come out very publicly in favor of those efforts, and help convince some reluctant House Republicans to get on board, and vote for the plan, despite misgivings about certain provisions.

Trending - Most Read Stories

House defeats one GOP immigration bill, delays vote on second plan

Published: Thursday, June 21, 2018 @ 3:04 PM

Struggling to find consensus on immigration reform, the House on Thursday rejected a more conservative Republican immigration reform bill, and then in a bid to salvage the effort, GOP leaders delayed action on a second immigration reform measure until Friday.

41 House Republicans voted against the first GOP bill, which was defeated on a vote of 231-193, as the plan received more votes than most GOP lawmakers had expected.

The Republicans who voted against the first GOP bill were a mixture of the Republican Party’s different flanks, featuring more conservative lawmakers who wanted to do more, and moderates who felt it went too far.

“This is a difficult issue,” said Rep. Mark Walker (R-NC), who voted for this bill, but wouldn’t tell reporters whether he would support a second measure on Friday.

“Any jot or tittle one way or the other, you lose people because of the complexities, because of the sensitivities, and the emotions in this particular piece of legislation,” Meadows said.

Here is the list of the 41 Republicans who voted “No.”

One of the reasons more moderate Republicans voted against the first bill was because of the lack of a path to citizenship for younger illegal immigrant “Dreamers,” who were brought to the U.S. by their parents.

While that is in the bill to be voted on Friday, those provisions then could cause some other Republicans to vote against it, arguing it is nothing but amnesty.

“I’m a big fat no, capital letters” said Rep. Lou Barletta (R-PA), after the first vote.

“It doesn’t do anything to stop illegal immigration,” Barletta added.

In debate on the House floor, Democrats focused mainly on the more recent immigration battle over the separation of illegal immigrant families, blaming President Donald Trump for doing little to seek compromise.

“On this issue, God is going to judge you as well,” said Rep. Michael Capuano (D-MA) said to Republicans who were backing the President’s get-tough effort on the border.

Trending - Most Read Stories