Tax Reform Push Heartily Endorsed by Senators, Even Some Democrats

Thune says Republicans could support infrastructure and taxes. (Rob Kunzig/Morning Consult)

Republican senators in charge of tax policy on Wednesday echoed President-elect Donald Trump and their colleagues in the House on their view that Congress should pass tax reform next year. Democrats didn’t immediately dismiss the idea.

Senate Majority Leader Mitch McConnell (R-Ky.) named tax reform as a second priority, behind changes to the Affordable Care Act, when listing his legislative agenda to reporters on Wednesday. “Comprehensive tax reform … We’re going to address the real concerns of the American people,” McConnell said.

The slow pace of work in the Senate has the potential to prevent tax reform from being an item that congressional leaders can put on Trump’s desk in the first 100 days of his administration. Senate Finance Committee Chairman Orrin Hatch (R-Utah) said Wednesday that he is engaged in substantive discussions with key players, including House Ways and Means Committee Chairman Kevin Brady (R-Texas), who has pointed to tax reform as a possible first-100-days item.

Hatch was noncommittal when asked whether he expects to see Brady’s timing apply in the Senate. “Well, I would like to see it apply, but we’ll have to see,” Hatch said.

Tax reform has the potential to bring along Democratic votes, especially if it is tied to an infrastructure spending package.

Sen. Dick Durbin of Illinois, the second-ranking Senate Democrat, said “there is room for conversation” on tax reform.

“But if it goes back to the old days of tax cuts at the highest levels of income, I think there will be a pushback,” Durbin said.

Trump’s transition team has not publicly called for a direct link between an infrastructure bill and a tax bill. However, at least one Republican thinks that the two could move together.

Senate Commerce Committee Chairman John Thune (R-S.D.) said Wednesday that Republicans can get behind an infrastructure plan, but probably only if it is tied to tax reform.  Lawmakers have a “lot of interest” in using repatriated business tax funds for infrastructure spending.

“I think there’s an interest among our members, in both the House and the Senate … in doing something on infrastructure, but my guess is if that gets done, it probably hitches a ride on tax reform,” said Thune, who is the third-ranking Senate Republican. “I don’t know that just an infrastructure bill on its own, a stand-alone, would go anywhere. I think it would have to be coupled with something that we view to be really advantageous in terms of stimulating the economy.”

Durbin said the failure to tie infrastructure spending and tax reform together might not be a nonstarter for Democrats, but that it depends on the merits of the tax package itself. “Ultimately, what I’m looking for is a progressive tax code,” he said. “If we can find a way to reduce taxes for middle and low-income families, I’m all ears.”

Next year’s tax package also could deal with extending tax breaks that are expiring or are due to expire soon. Hatch made clear Wednesday that he does not think extenders should come up during the lame-duck session.

“I don’t think we do [them], and I’m not a big fan of doing extenders,” Hatch told reporters when asked if he wants to complete a package in the lame duck.

There are 47 total tax breaks that expire in December, according to a Mercatus Center analysis released last week. Around half of the expiring extenders are tax credits.

Hatch’s position on the timing for tax extenders echoes House Ways and Means Committee Chairman Kevin Brady (R-Texas). Emily Schillinger, a Ways and Means spokeswoman, said Brady believes tax extenders shouldn’t come up this year.

Morning Consult