Senate Republicans Pass Budget With Eye on Tax Reform

President Trump meets with the House Ways and Means Committee on September 26. (Public domain photo by The White House.)

Trump’s push for tax reform may become reality as Republicans unify over a proposed plan that aims to sharply reduce tax rates by the end of 2017.

During a Thursday night vote-a-rama session, the Senate voted 51-49 to pass the fiscal 2018 budget, with only Sen. Rand Paul, R-Ky., joining the Democrats in opposition.

By combining a technique known as reconciliation—made possible by reconciliation instructions in the fiscal 2018 budget—with Vice President Pence’s tie-breaking vote, Republicans need merely 50 votes to pass tax reform. The party currently holds 52 seats in the Senate.

With Republicans and Democrats the furthest apart in recent history on tax issues, Trump needs the support of nearly every Republican in the Senate.

There is no official Senate or House tax plan as of yet, but Trump’s proposal would result in 1.5 trillion dollars in tax reductions over the course of ten years, according to The Washington Post.

“If we get the Republicans we need, which is virtually every single one of them…we will get the largest tax cut in the history of our country,” Trump told the Heritage Foundation, a conservative think tank.

Recent support from Sen. Thad Cochran, R-Miss., and Sen. John McCain, R-Ariz., makes the unification required to pass reform less far-fetched.

“I have long supported efforts to fix our burdensome tax system and hope Congress will produce meaningful reform,” said McCain in a statement on Tuesday following a party-line vote to expedite the tax reform process.

Passage of this bill could prove crucial to the Republican agenda following the gridlock in Congress regarding healthcare reform.

However, some details of the tax plan have yet to be agreed upon. For example, lawmakers still have not identified where the taxes are being cut from, and many are concerned that this will lead to a tax plan that primarily benefits the wealthy.

According to the Tax Policy Center, the positive macroeconomic effects from tax reform would not be large enough to offset the decrease in tax rates, leading to increased deficit

Republicans are currently faced with this very debate as some argue in favor of decreasing individual and corporate rates, while others worry about the potential for decreased revenue to increase the already insurmountable debt in the United States.

The Tax Policy Center also claims that three-quarters of the tax cuts in Trump’s proposal would benefit the top 1 percent; however, all levels of income would receive some measure of reduction in taxes. The plan also seeks to reduce corporate taxes to 20 percent with the hopes of boosting the economy and employment opportunities.  

Negotiations regarding the 20 percent corporate tax rate, among other details of Trump’s proposed tax reform, are still underway as Congress begins the process of drafting its own proposal with the hopes of passage and implementation before the end of 2017.

Amid controversy and uncertainty, Speaker Paul Ryan said he’s “pretty confident” in Congress’ ability to pass tax reform.

As of now, it is unclear which Republicans, if any, would vote against the final proposition. Sen. Paul did express some dissatisfaction with Trump’s proposal, but claimed that a decrease in spending would shift his vote to a ‘yes.’  However, his proposed amendment in the Thursday session to reduce discretionary spending failed.

Moreover, Senators Lisa Murkowski, R-Ala., and Susan Collins, R-Maine, who both had strong reservations on health care reform, have both been supportive of the current tax reform conversations.

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