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Garbage In, Garbage Out: GOP Tax Scam Riddled With Errors, Facing Challenges

Mitch McConnell’s decision to circumvent regular order, write the Republican tax scam in secret, and then rush it through the Senate against bipartisan opposition has, shockingly, set up major challenges for the bill as it approaches conference. Here’s where the corporate and billionaire tax cut stands now:

First, Politico reports that the drafting errors in McConnell’s occasionally handwritten plan could open “broad avenues for tax-avoidance” and has left Bush administration veterans saying things like “The more you read, the more you go, ‘Holy crap, what’s this?’” about trying to implement the plan.

Second, in their rush to get a bill, any bill, to conference, Senate Republicans accidentally nullified the research & development tax credit, leading to calls from House Majority Leader Kevin McCarthy to make further expensive changes to the bill and forcing the conference to find ways to increase revenue over their House- and Senate-passed legislation.

Third, the House Freedom Caucus wants more leverage over a possible government shutdown, and used Monday’s conference vote in the House to make clear that they’ll happily threaten the tax bill to get what they want.

IN CASE YOU MISSED IT

Politico: ‘Holy crap’: Experts find tax plan riddled with glitches
By Brian Faler
December 6, 2017

Key points:

  • Republicans’ tax-rewrite plans are riddled with bugs, loopholes and other potential problems that could plague lawmakers long after their legislation is signed into law.
  • Some of the provisions could be easily gamed, tax lawyers say. Their plans to cut taxes on “pass-through” businesses in particular could open broad avenues for tax avoidance.
  • An entirely new international tax regime, one experts are still trying to parse, would go into effect Jan. 1, only days after lawmakers hope to push the plan through Congress.
  • “The more you read, the more you go, ‘Holy crap, what’s this?’” said Greg Jenner, a former top tax official in George W. Bush’s Treasury Department. “We will be dealing with unintended consequences for months to come because the bill is moving too fast.”
  • What’s more, some of the fixes could be expensive, potentially throwing lawmakers’ budget numbers out of whack.
  • Republicans may try to pass subsequent legislation to address problems, but that may not have the “reconciliation” protections — a set of complex rules in the Senate that allow them to shut off Democratic filibusters — on which they’re now relying to move their plan through the chamber. That would enable Democrats to block any fixes.
  • The House bill also includes a whole new way of taxing multinational corporations — aside from the one-time tax — that lawmakers have hardly debated, and which experts are still trying to understand.
  • “It’s crazy,” said one Republican lobbyist. “I don’t think anyone could explain it, let alone comply with it” by Jan. 1.

Read the full article here.

New York Magazine: The Senate GOP Accidentally Killed Some of Its Donors’ Favorite Tax Breaks
By Eric Levitz
December 4, 2017

Key Points:

  • Mitch McConnell never subjected his blueprint for restructuring the world’s largest economy to a single hearing. His caucus never invited experts to offer insight into the bill’s implications for housing, health care, higher education, outsourcing, or tax evasion. This haste had an upside for the Senate GOP: It allowed the party to pass deeply unpopular changes to the tax code before the public had time to learn about them.
  • But approaching major legislation like an Adderall-addled sophomore approaches an overdue term paper came with a minor drawback: It forced the party to pass a tax bill before they had time to read it.
  • The GOP had originally intended to abolish the AMT. But on Friday, with the clock running out — and money running short — Senate Republicans put the AMT back into their bill. Unfortunately for McConnell, they forgot to lower the AMT after doing so.
  • This is a big problem. The Senate bill brings the normal corporate rate down to 20 percent — while leaving the alternative minimum rate at … 20 percent. The legislation would still allow corporations to claim a wide variety of tax credits and deductions — it just renders all them completely worthless. Companies can either take no deductions, and pay a 20 percent rate — or take lots of deductions … and pay a 20 percent rate.
  • Senate Republicans wanted to pass their (indefensible) tax bill before anyone had time to figure out what was in it. They succeeded a bit more literally than they’d planned.

Read the full article here.

Huffington Post: Pursuing Unclear Concessions, House Freedom Caucus Nearly Derails Tax Bill Conference
By Matt Fuller
December 4, 2017

Key Points:

  • About a dozen House Freedom Caucus members initially voted against a motion for the House and Senate to negotiate on their differing tax bills, blocking the motion from adoption. But after a tense conversation on the floor between leaders of the conservative caucus and Majority Leader Kevin McCarthy (R-Calif.) and chief deputy whip Patrick McHenry (R-N.C.) ― as well as an off-the-floor phone conversation between HFC Chairman Mark Meadows (R-N.C.) and Speaker Paul Ryan (R-Wis.) ― the conservatives flipped their votes to allow the tax bill to go to conference.
  • Congress needs to pass a bill to continue government operations by the end of the week. Republican leaders wanted that bill to go until Dec. 22, so they could use the next two weeks to work out an agreement with Democrats on overall spending numbers. If that gets done, then Congress would pass yet another CR to buy time for an even larger spending bill that would fund the government through September. And because Republicans will need to get some Democrats on board to support these bills in the Senate, the conservative caucus’s votes probably aren’t that vital.
  • That last insight was one of the reasons Freedom Caucus members held the motion to go to conference on the tax bill hostage. They may not have any sizable leverage over these spending bills, but they have plenty of sway over the tax legislation.
  • When HuffPost asked Freedom Caucus member Scott DesJarlais (R-Tenn.) if conservatives were afraid they had no leverage over the spending bills because at least some Democrats would be supplying the votes for these measures, not exclusively Republicans, DesJarlais said that was “exactly” the issue.

Read the full article here.

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