A number of Republican senators have expressed strong reservations about the tax-reform bill currently under consideration in the upper house. While there are only a handful of dissenters, the narrow 52–48 majority in the Senate means that the party cannot afford to lose more than two if it is to push the bill through.
Most of the skeptics are concerned about debt. Susan Collins (Maine) questions the inclusion of individual-mandate repeal and the removal of SALT deductions. And Ron Johnson (Wis.) opposes the different treatment of different kinds of business taxes. Senators Bob Corker (Tenn.), Jeff Flake (Ariz.), Todd Young (Ind.), and James Lankford (Okla.) have emphasized the dangerous effects of further expanding the deficit. Flake, speaking to an Arizona radio station, noted that “we desperately need tax reform,” but that “it [needs to be] really tax reform and not just tax cuts.” Corker has said outright that he will not vote for a bill unless it ”reduces deficits and does not add to deficits with reasonable and responsible growth models. And unless we can make it permanent, I don’t have any interest in it.”
Some have also taken issue with the argument that tax cuts will fund themselves. Young, in particular, has complained that “we can’t assume unreasonable rates of economic growth or we’re being fiscally irresponsible,” a criticism that has been echoed even by some — Charlie Dent (Pa.), for example — who are more supportive of the bill.
These concerns have largely been ignored by the White House. The president’s budget chief, Mick Mulvaney, has suggested that the skeptics are “ignoring reality.” “You lower tax,” Mulvaney insists, “it has impact. It just does.” Evidently Mulvaney was not among the Republicans who spent years criticizing the awful deficit expansion of the Obama presidency.
Alone among Senate Republicans, Collins has criticized the state-and-local-tax-deduction repeal, though this appears to be based on a misunderstanding that it benefits middle and lower-income families, when in fact it is claimed almost entirely by the rich. Collins has also criticized the inclusion of individual-mandate repeal in the tax bill, preferring that it be kept separate from tax reform, as it is in the House bill. Given that the mandate repeal is essential to the Senate bill (because it counteracts some of the deficit effects), I’m inclined to assume the Maine senator will end up voting against the bill.
Senator Johnson has emphasized the Senate tax bill’s treatment of pass-through businesses as the reason for his opposition to the bill as currently written. Pass-throughs are over 90 percent of American businesses and “generate over half of U.S. business income,” per a 2015 NBER paper. While they would face a lower tax rate under the reforms than they do now, pass-throughs would still face higher taxation than corporations. Johnson, whose family runs such a business, thinks this is unfair.
If any three of these senators votes against the bill, the measure will fail – unless, of course, it garners support from Democrats. While it is unlikely that amendments will satisfy all of the dissenters, the Senate GOP ought to take their concerns seriously as the bill enters debate next week. If they don’t, tax reform may go the same way as did health-care reform. And then? All bets are off.