The Senate has managed to pass tax reform after many months of debate, ending their failure to pass any meaningful agenda items in the first year of the Trump presidency. President Trump in the closing days met with many holdout senators to find ways to get them to approve the legislation.
The bill did not look likely to pass until McCain suddenly reversed course from his prior obstructionist stance and stated he was going to vote for the bill, paving the way for the rest of the liberal Republicans in the chamber to follow his lead. Flake, Murkowski, and Collins all announced in he last few days that they would also be voting in the affirmative for the bill.
The reform had last minute additions that put it more in line with the House bill, keeping property tax deductions up to $10,000. It still eliminates deductions for income taxes, which is going to hit blue state residents in very high tax states, like California, New York, and Maryland, hard in the coming years.
The bill lowers the corporate tax rate from 35 to 20%, making the United States far more competitive on the world stage and puts it more in line with countries like Canada who also have a very low tax rate on corporate income. President Trump originally called for the corporate tax rate to be dropped to 15%. The average taxpayer, especially those not in the upper income brackets, should see a sizable tax reduction under the Senate plan.
Other Late Amendments to the Tax Reform Bill
Not only was this a legislative victory on taxes, President Trump managed to finally get the Senate to vote for a straight repeal of the individual mandate for Obamacare too, after the Senate voted to kill the bill repealing the very same measure earlier this year.
The Obamacare individual mandate repeal was made possible after McCain, Collins, and Murkowski ended their opposition to any reform of Obamacare. They were the deciding votes against the Obamacare repeal attempts earlier this year, ultimately killing the attempt by the Senate to remove just the individual mandate.
Senator Ted Cruz also slipped into the tax bill a provision that allows for some 529 savings funds to be used for homeschooled individuals. The provision passed with Vice President Pence casting the tie breaking vote, ending in a 51-50 final vote.
The bill also opens up oil drilling in the Arctic National Wildlife Refuge in Alaska, which the Senate Republicans enacted to the chagrin of the Senate Democrats. They defeated an amendment from Senator Maria Cantwell of Washington state which would have banned all drilling for oil in the national park.
The only Republican senator to vote against the measure was Senator Bob Corker, who had a public meltdown on the Senate floor after the Senate Parliamentarian announced that his trigger to raise taxes amendment was not legal under Senate reconciliation rules. This is ironic in that his earlier verbal spats with President Trump resulted in him calling the White House an adult day care center for the President. Senator Pat Toomey had to talk him down as he was having a verbal fight with the parliamentarian.
“As the clock ticked on for roughly an hour, Corker and two other Republicans — Arizona’s Jeff Flake and Wisconsin’s Ron Johnson — still hadn’t voted. A throng of Republicans circled Corker and Flake as Sen. Pat Toomey, a member on the Senate Finance Committee who’s cut deals with Corker on the tax bill already, stood next to Corker, explaining something at length.
At one point, the Senate’s Parliamentarian came over and Corker used his hands to try to convey a point to her for several minutes.
Corker walked across the chamber to speak with Sen. Angus King, an independent from Maine. The two men looked over some papers, then walked back over the Republican huddle. Corker asked more questions. “Now, Bob,” Toomey could be heard saying with frustration, this time standing face-to-face with the Tennessee Republican, rather than side by side. Eventually, Corker voted against sending the bill back to committee, but the incident raises questions about the future of the Senate’s tax bill.”
The final vote passed 51-49, with every Democrat, including retiring Republican Senator Corker, voting against the tax reform legislation. Minus the aforementioned Senator, every Republican voted to pass the legislation and send it back to the House.
What Happens Now With Tax Reform?
The House of Representatives can choose to start a conference committee to hammer out the differences between the House and Senate or the House can adopt the Senate plan as passed, which would immediately be sent to the President’s desk for signage. A conference committee compromise bill would result in a straight up or down vote on the bill in both chambers to either adopt or reject the bill.
The Senate tax reform reconciliation bill as passed:
NOTE: For those concerned with the corporate tax reduction, page 105 lists the start date for the reduction for tax years after December 31st, 2018.