Setbacks are good.

GOP handed more megabill setbacks as numerous tax provisions get sidelined

The items are relatively small, but the Senate’s legislative referee is still weighing the fate of other tax provisions.

Brian Faler

Democrats say the Senate’s rules keeper has nixed several tax provisions from Republicans’ domestic policy megabill, including a special carveout for religious schools from a proposed hike in a college endowment tax.

A separate break for private and religious schools was also dropped, as were regulations pertaining to guns.

Parliamentarian Elizabeth MacDonough is also said to be objecting to a section in the sprawling tax, energy, immigration and defense bill aimed at reducing improper payments of the Earned Income Tax Credit, a wage supplement for the working poor. She also struck plans to up penalties for leaking private taxpayer information — a provision inspired by the leak of President Donald Trump’s and other wealthy people’s tax information to the news media.

The deleted items are relatively small, especially compared to the health provisions MacDonough has struck in recent days that have forced Republicans to scramble to shore up the package. But the provisions nevertheless helped win support for the overall plan from individual lawmakers.

Dropping a proposed charitable credit benefiting religious schools could save Republicans money.

Still on deck, Democrats said, are their challenges to parts of the bill addressing a tax incentive program for economically struggling areas called Opportunity Zones; a section related to foreign entities claiming a clean energy production tax credit; provisions aimed at preventing undocumented workers from claiming refundable tax credits; and a new savings vehicle for children, dubbed Trump accounts.

MacDonough has also not yet considered a Democratic bid to kill Republican plans to use a so-called current policy baseline to measure the cost of their tax package, said Sen. Ron Wyden, the ranking Democrat on the Finance Committee, in a statement.

The announcement comes as part of a so-called Byrd Bath, a process by which MacDonough goes through lawmakers’ legislation, provision by provision, to ensure it abides by the Senate’s strict rules about what may be included in the so-called reconciliation bill.

They’re supposed to be exclusively focused on budgetary matters, though, because they are filibuster-proof, lawmakers frequently try to include other provisions as well. The decisions about which items fail sometimes leave lawmakers scrambling to rewrite them so they’ll conform.

MacDonough does not comment publicly on her determinations, and it’s unclear whether the provisions could still be salvaged if they are rewritten. A spokesperson for Senate Finance Committee Chair Mike Crapo (R-Idaho) did not immediately respond to a request for comment.

It’s generally easier to include tax provisions in reconciliation bills, because they are so closely tied to revenues, than legislative language dealing with other subjects.

“We have been successful in removing parts of this bill that hurt families and workers, but the process is not over, and Democrats are continuing to make the case against every provision this Big, Beautiful Betrayal of a bill that violates Senate rules,” said Sen. Jeff Merkley (D-Ore.), the ranking member of the Budget Committee.