WASHINGTON, D.C. – The question on a lot of minds this week is, ‘How much muck will cling to tax reform legislation as it trudges its way through the Swamp?’. The hopes of a truly transformational reform of the U.S. tax code have waned as the Establishment acquiesced to revenue fiends and accepted the Left’s premise of progressive taxation riddled with special carve outs.
Still, a chance remains to move the ball down field and achieve some tax relief for individuals and businesses alike. But first, the Senate has to pass it’s own tax bill before congress can reconcile the two versions and put a bill on President Trump’s desk.
Several senators can make or break the effort to get there:
“With a Senate vote tentatively set for Thursday, a few GOP holdouts are looking to make last-minute deals.
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Senate Majority Leader Mitch McConnell of Kentucky needs to whittle down the list of roughly a half-dozen members of his caucus to win approval for the measure. So far, he doesn’t appear to have the votes nailed down.
As negotiations continued Monday, here are nine senators who have yet to commit publicly to supporting the latest version of the bill.”
Now some of those holdouts are using the leverage for more substantial tax relief for small business owners, while others are pressing for revenue guarantees.
For instance, Sen. Ron Johnson (R-WI), a former small-business owner, is fighting to get a better pass through rate for businesses. He argues the current bill gives large breaks to corporations, but smaller-business owners don’t enjoy the same benefit even though they are responsible for the vast majority of job creation across the nation.
“With just a few changes, some mathematical, the middle class and job producers can get even more in actual dollars and savings,” Johnson tweeted recently.
But Establishment bugaboo Sen. Bob Corker (R-TN), who has made a habit of poking Trump and conservatives int he eye in his lame duck status, is playing the role of deficit hawk and working to possibly make tax cuts temporary if revenues fall short of forecasts.
“Corker has said he may vote against the bill unless it includes a “backstop” to curb future budget deficits if economic growth promised by the bill’s authors doesn’t materialize. To hedge against an economic shortfall, Corker and other deficit hawks are pushing for a provision that would raise taxes if the plan doesn’t boost the U.S. economy enough to make up for lost revenues.
“What several of us have asked for is a backstop or trigger in that event we don’t meet the projections that have been laid out — since we’re not going to score it — that we have a backstop,” Corker told CNBC’s “Squawk Box” on Tuesday. And so that’s what we’ve been working on throughout the weekend and feverishly today.””
There are a multitude of problems with this logic, which is to be expected from a Swamp-dweller infused with a tax and spend mentality that has been the object of voter frustrations for decades.
First, deficit reduction and chipping away at the national debt is a laudable goal. However, the same self-professed ‘Deficit Hawks’ usually go radio silent when the issue of cutting spending is brought up. What is the first thing you do in your household to reduce debt? CUT SPENDING!
Alas, cutting spending is anathema to the Establishment in D.C., despite it being the most effective option to achieve the goals they claim to support.
Secondly, what economic twilight zone does Corker live in where raising taxes if the economy falters is a smart move? This is a Republican, apparently, that is advocating tax hike triggers if the economy is not doing so well. It is foolish to believe that this will do anything but depress economic activity further, exacerbating the problem.
What’s more, Corker seems to completely discount a long validated relationship between tax rates,economic activity, and tax revenues.
History has validated the famed ‘Laffer Curve’, named for Reagan economist Art Laffer, time and again. It shows that tax rate cuts, more often than not, actually increase revenue to the government. This has been a self-evident truth to conservatives for years, but, like many other conservative planks in the Republican platform, is being abandoned by a Left-leaning Establishment.
Moreover, if the tax cuts can be reversed so easily businesses will not have the same incentives to invest and expand, and individuals will be punished again for Big Government’s spending addiction.
So, as the Senate tax bill wades through the Swamp in an attempt to build consensus and vote later this week, the chances of passing the kind of reform the American taxpayer deserves are slim. Hopefully, though, the Senate can still move the ball downfield just enough to put us in scoring position.
For more details on the lawmakers that could make or break the Senate tax bill’s chances, click here.