House GOP tosses...

House GOP tosses conservative playbook in bid for tax reform

Lawmakers look willing to move beyond their party’s orthodoxy in bid for win ahead of 2018 midterms.

By BRIAN FALER

House Republicans are so desperate for a win on taxes that they’re agreeing to proposals that would have caused internal party warfare just a year or two ago.

They’re considering forgoing a big cut in the top income tax rate on the rich, offering moderate-income Americans so many tax breaks that many would be excused from paying taxes entirely and passing a potentially 1,000-page tax bill few have seen within a matter of weeks. Last week, they agreed to a budget that ignored their demands for deep cuts in federal spending just so they could pass a tax bill using a special procedure that enables them to move forward without any Democratic votes.

It’s an open question whether Republicans will be as flexible when party leaders release their entire tax bill, due Nov. 1, and everyone can see exactly who will be the losers under their plan. They already have some internal battles, with Republicans from high-tax states fighting a proposal to dump a long-standing deduction for state and local taxes.

But for now, once-controversial proposals are barely causing a stir, a sign lawmakers are willing to move beyond their party’s orthodoxy on taxes and into a more freewheeling debate on how to rewrite the code.

“The American people want us to get to ‘yes’ on tax reform,” said Rep. Jim Renacci (R-Ohio), who sits on the tax and budget committees.

It’s an indication of the pressure lawmakers feel to produce a win ahead of next year’s midterm elections after spending seven fruitless months trying to rescind the Affordable Care Act. Many are terrified at the prospect of facing voters next year with nothing to show for their time in power.

Even notoriously balky House conservatives are making nice.

“We’ve got to get the economy going — it’s all about wages going up — and if I can endure some short-term pain for long-term benefits, I’m willing to do that,” said Mark Meadows (R-N.C.), head of the chamber’s staunchly conservative Freedom Caucus.

The latest flexibility came with Thursday’s House adoption of a Senate budget plan. The annual fiscal blueprint used to be a big deal for House Republicans — Speaker Paul Ryan made his name as chairman of the Budget Committee, writing plans calling for drastic cuts in federal spending. And for years, House conservatives had demanded budgets balance the government’s books.

But the fiscal blueprint they adopted Thursday does no such thing, and some lawmakers question the importance of the budget, saying they agreed to it only in order to tap the all-important reconciliation process they intend to use to move tax legislation through the Senate.

“We don’t follow budgets anyway — it’s really just a mechanism to get tax reform done,” said Renacci.

They are also willing to compromise on their long-standing calls to cut the top income tax rate.

Just a few years ago, House Republicans walked away from a tax reform plan written by then-Ways and Means Chairman Dave Camp in part because he cut the top rate only to 35 percent, from 39.6 percent. At the time, Republicans had been promising to cut the top rate to 25 percent — something they had pledged since they took over the House in 2011 — but Camp was unable to make the numbers work.

Now, Republicans are planning an even higher top rate. Their plans are still to be determined, but they may leave the top rate where it is, which President Barack Obama raised as part of the 2013 fiscal cliff agreement.

“I don’t think there’s anybody out there that is talking about NFL players needing a tax cut — I don’t think high-powered doctors and lawyers need a tax cut,” said Rep. Rob Woodall (R-Ga.), who emphasized Republicans' plans to instead cut taxes on small and large businesses.

At the same time, they’re willing to take millions of Americans off the tax rolls entirely with their plans to double the standard deduction and expand a child tax credit. Just a few years ago, Republican presidential candidate Mitt Romney lamented that, at the time, 47 percent of Americans did not pay federal income taxes.

Meadows defended the plan, saying: “I don’t think we’ve said, 'Tax more people.' In fact, if anything, we’ve said 'Tax fewer people.'

“It’s a function of putting more of their money back in their pocket,” he said.

There have also been relatively few complaints about the prospect of passing a giant tax rewrite bill, the biggest in a generation, in a matter of weeks. Republicans plan to release it Nov. 1, with committee action penciled in for the following week and House approval coming later next month.

Said Rep. Pat Meehan (R-Pa.), “It’s not as if these issues are things that have never been considered before — there’s a lot of work that’s been done.

“There’s been long discussion on the outlines of this,” he said.

Of course, not everyone is happy.

Republican leaders have faced a rebellion from colleagues from high-tax states over their plan to dump a deduction for state and local taxes, and lawmakers are tangling with the Trump administration over plans to push people out of 401(k) retirement plans and into Roth IRAs.

And some lawmakers have chafed at the secrecy surrounding the GOP tax plan.

"We don't have the details — that's why I'm frustrated," said Rep. Chris Collins (R-N.Y.).

It also remains to be seen whether the mood will hold once Republican leaders unveil their bill. Though their budget allows for a $1.5 trillion tax cut, the nonpartisan Tax Policy Center figures Republicans’ tax cut promises would cost some $5.5 trillion, meaning lawmakers need to come up with a whopping $4 trillion in savings.

But for now, Republicans are ready to deal.

“This is a great opportunity — I think people are seizing the moment,” said Meehan.