Politics

Republicans Struggle to Define Whom Their Tax Overhaul Will Help

Echoes of failed health care effort in senators’ lack of specificity on tax goals

Tennessee Sen. Bob Corker supports a tax overhaul that won’t increase the deficit and promotes growth. (Bill Clark/CQ Roll Call File Photo)

Senate Republicans are still weighing who specifically will benefit from their pending overhaul of the U.S. tax code.

When asked, many were unable to communicate exactly which income brackets they would want to see reductions directed toward, instead opting to use catch-all phrases such as “hard-working Americans” or “ordinary people.”

The lack of specificity on the overall goal harkens back to their failed health care effort, when Republicans had difficulty honing in on a unified objective outside of simply repealing the 2010 health care law.

Others took a more holistic approach and said the focus was more on improving the overall economy and spurring job creation, which could lead to relief across the board in nearly every income bracket.

And some took the blanket statement of urging tax cuts for all, a goal that could be difficult given the constraints Republicans are under with their slim margin in the Senate.

Some had more direct answers.

“Well-to-do people are going to be paying a lot more taxes,” Senate Majority Whip John Cornyn said.

Republicans are using the fast-track budget procedure known as reconciliation to advance the tax legislation, which would allow the Senate to pass a bill with only a simple majority support.

But with just 52 seats, Senate Republicans can only afford to lose the backing of two members and still call in Vice President Mike Pence to break a tie. And several members have shot warning signs to leadership on their own redlines for the effort.

Deficit concerns

One of the most critical aspects will be the impact of the proposal on the deficit.

Lawmakers like Sen. Bob Corker of Tennessee have said they would not vote for the measure if it adds even a single penny to the deficit. Others have said they would prefer not to operate under those constraints.

If Republicans do aim for a deficit-neutral plan, it would make it much more difficult to advance a package that relies on the theory that short-term deficits can lead to long-term economic growth.

Instead, the GOP would be forced to find ways to pay for the tax cuts, inevitably creating a “winners and losers” situation in which some income brackets would see a reduction in their taxes, while others may see an increase.

When asked how they would determine which brackets would be affected — either positively or negatively — several Republicans were unable to say exactly.

“Hardworking men and women of America. The wonderful middle class,” Sen. Pat Roberts of Kansas said. “It depends on a lot of different things, but I think if you say middle class, everybody’s got it pretty well figured out.”

“It should benefit everybody, but including and especially ordinary people,” Sen. John Kennedy of Louisiana said. “The middle class, the people who get up every day and go to work and obey the law and try to teach their kids morals.”

Kennedy later got slightly more specific, saying it should benefit “not people at the top, not people at the bottom.”

“Working people, people who are out there working, that’s who I am focused on,” Sen. Lindsey Graham of South Carolina said. “It depends on what part of the country you live in. South Carolina is different than it would be in New York.”

One of the difficulties Republicans face is navigating the effect certain proposals would have on different states.

Removing the state and local tax deduction, for example, has become a huge point of debate within the party because some states, like Pennsylvania and New York, might be more adversely impacted than others.

And without an exact idea of which income brackets should see the most relief, decisions on policy could be even harder.

No clarity yet

The effort is still in the early stages and there is no legislative text available yet, making it more difficult to make definitive decisions on which income levels might be hit the hardest — or which would stand to benefit the most.

“We haven’t established what the break points are yet,” Sen. Rob Portman of Ohio said. “The focus has been middle-class tax cuts and people who are in that middle range.”

When pressed, Portman said the cuts would most probably be felt in households that make over $100,000 a year.

But lawmakers are already seeking to force leadership to outline how the final plan would affect various income brackets.

Corker, for example, expressed support for a Democratic amendment to the fiscal 2018 budget that would require an in-depth analysis on the effect of the tax plan on each income level.

“What I want to do is cause our economy to grow, and I want that to cause people’s wages to go up. And that to me should be the focus of tax reform,” the Tennessee Republican said Thursday. “I’m interested in the broad outlines of it not increasing our deficit, that it’s permanent, that it creates growth.”

Others, however, were more open to a plan that would create a deficit, in the anticipation that the proposal would ignite economic growth and ultimately pay for itself.

“It’s far more complicated if you have senators endeavoring to put forward a plan that is deficit-neutral on a static score. That inevitably involves taking away from some to give to another,” Sen. Ted Cruz of Texas said. “I think that’s a mistake. I think we need a tax cut.”

Republicans, based on a broad framework released last month, are looking to double the standard deduction and provide an enhanced child tax credit, measures that several senators said could provide tax relief to several different income brackets.

But some are waiting for the full outline before making any final decision.

“I want to see the whole package,” Sen. Shelley Moore Capito of West Virginia said. “I think we want to make sure that the hardworking people in those middle income brackets are the ones getting the relief.”

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