WASHINGTON – A key Senate Republican on Wednesday said he would not support the emerging GOP tax plan and another expressed major reservations about the bill, a thunderclap of trouble for party leaders as they attempt to use a slim Senate majority to pass a major overhaul of the U.S. tax code.
Sen. Ron Johnson, R-Wis., said he was opposed to the new bill because it disproportionately benefits corporations at the expense of other businesses.
"If they can pass it without me, let them," Johnson said in an interview with the Wall Street Journal. "I'm not going to vote for this tax package."
Johnson said later in a statement that he could support a version of the bill if significant changes are made.
Separately, Sen. Susan Collins, R-Maine, said she had major concerns over Republicans changing their tax bill to include language repeal a major part of the Affordable Care Act, saying that was a "mistake."
"This bill is a mixture of some very good provisions and some provisions I consider to be big mistakes," Collins said.
The combined warnings from Johnson and Collins cast doubt over whether Republicans can find enough support to pass their bill. The party controls 52 votes in the 100-seat Senate, and 'no' votes from Collins and Johnson would mean every other Republican needed to support the bill for it to pass. Should the vote split evenly, Vice President Pence would vote in favor of the bill to break the tie.
There are a number of Senate Republicans who have not said how they will vote on the evolving bill. Sen. Bob Corker, R-Tenn., for example, has said in the past he would not support a tax cut bill that included provisions that expired, as the new GOP bill is designed to do. Asked Wednesday, Corker said he was still reviewing the bill.
Another potential holdout, Sen. John McCain, R-Ariz., repeatedly declined to say whether he'd vote for a tax bill that includes the proposed Republican change to the Affordable Care Act. McCain, who voted against a previous attempt to repeal the Affordable Care Act, said he wanted to review the tax bill as a whole.
Johnson's complaint centers on how the Senate bill would tax on corporations versus other businesses.
The measure would permanently lower the corporate tax rate from 35 percent to 20 percent. But it would only temporarily create a new tax deduction for companies that pass through their income to shareholders through the individual income tax code, such as partnerships. Unless Congress acted later to extend those cuts, they would expire after 2025 and revert to the current tax system.
"These businesses truly are the engines of innovation and job creation throughout our economy, and they should not be left behind," Johnson said in a statement. "Unfortunately, neither the House nor Senate bill provide fair treatment, so I do not support either in their current versions."
By allowing those tax deductions to expire, it would increase taxes these companies pay by around $45 per year in 2026 and 2027, according to a forecast put out by the Joint Committee on Taxation. House Republicans' version of the tax legislation contains more generous, and permanent, tax cuts for these businesses.
The companies Johnson is referring to are often small businesses, but they can also be companies such as hedge funds, law firms, real estate companies and other large companies. Some companies are treated differently than others in the Senate bill, though changes were made late Tuesday night.
Johnson's complaints raise a new set of headaches for Republicans. They can't easily address his issues by cutting taxes for the companies he's concerned about, as doing that would make the tax package larger and add more to the debt. Under the Senate rules they're trying to use to pass the bill, they can't add more tax cuts to the plan without offsetting those changes with other revenue increases.
Senate GOP leaders are hoping to pass their new version of the bill through the Senate Finance Committee this week and then bring a final version of the bill to the Senate floor the week after Thanksgiving. But growing opposition could scuttle those plans, and GOP leaders have had a hard time corralling members on tough votes this year, failing several times to get enough support on health care bills.
The GOP unrest comes as Senate Democrats exploded over the late-night changes that Republicans made to their tax cut bill, saying the new GOP plans would further punish the middle class.
The new GOP additions to the bill would repeal the individual mandate of the Affordable Care Act and would force all tax cuts for individuals and families to expire after 2025. Cuts to the corporate tax rate, however, would be permanent under the bill.
Democrats spent Wednesday blasting Republicans for forcing through last-minute changes that they say almost all hurt the middle class.
"Why do people think this is a swamp?" said Sen. Mark Warner, D-Va. "This is Swamp 101."
Treasury Secretary Steven Mnuchin, meeting with lawmakers on Capitol Hill, told reporters the bill would make business cuts permanent because companies needed long-term assurances of their tax rates for planning purposes.
He also shrugged off concerns that the public would balk at a bill that, as written, would provide only temporary tax cuts to individuals – setting them up for a possible increase later. Mnuchin, echoing other Republicans, predicted the individual tax cuts would eventually be extended or made permanent.
"I don't think it's an optics issue," Mnuchin said. "I think people understand that we'll fix the personal side."
But it's unclear how they can address Johnson's complaints, at least before the finance committee votes on the bill Thursday as planned.
The Senate debate at points Wednesday grew heated.
Senate Finance Committee Chairman Orrin Hatch, R-Utah, typically one of the chamber's most collegial members, bristled at attacks from Democrats. At a committee hearing to debate the changes, Hatch laced into Sen. Michael Bennet, D-Colo., saying Democrats were trying to bankrupt Medicare and also alleged that Democrats were trying to commandeer the committee.
At one point, Hatch said he was sick of Democrats pursuing ways to add government spending while simultaneously lecturing Republicans about adding to the debt.
"I've had enough of that to last me the rest of my life," he said.
The GOP effort to pass a sweeping tax cut bill appeared to be sailing through Congress until the late change by Senate Republicans on Tuesday, when they decided to include the provision that would repeal the individual mandate. This change would free up more than $300 billion in additional money that Republicans can use to offset their tax cuts, but it also laid bare the difficult budgeting process they face as they try to craft a bill.
Senate rules allow the tax cut bill to raise the deficit by no more than $1.5 trillion over 10 years. The Senate is also prohibited from passing a bill that would add to the deficit after 10 years unless there is bipartisan support. That's because the chamber is trying to pass the tax cut measure through a process known as "reconciliation," which allows changes with just a simple majority of votes in the Senate. Otherwise, they need 60 votes to pass a broader bill, and Republicans only control 52 of the Senate's 100 seats.
Allowing the tax cuts to individuals to expire would save roughly $800 billion over two years, according to new estimates put out by the Joint Committee on Taxation.
Sen. John Thune, R-S.D., a member of the Finance Committee and Senate GOP leadership, raised the possibility that Republicans could hold a vote once the bill comes to the Senate floor to waive the budget rules and allow the individual cuts to be permanent. That would require 60 votes, forcing Democrats to decide whether to hold firm in opposition or vote to ensure middle-class tax cuts are kept for the long term.
"All we need is a few Dems to help us," Thune said.
Republican leaders worry that more GOP lawmakers could join Johnson and Collins in raising major objections to the bill.
Sen. Lamar Alexander, R-Tenn., said Wednesday that he would support the tax bill as currently designed, but that it was unclear if the changes to the Affordable Care Act would be allowed to remain.
"That's yet to be determined, whether that will be in the final bill," he said.
Alexander said he favored passing the tax cut bill with the provision that repeals the individual mandate and then hold a vote on a separate, bipartisan measure that he has worked on with Sen. Patty Murray, D-Wash. That provision would resume funding of federal subsidies to help people afford health insurance after the Trump administration halted those payments in October.
Democratic support, however, remains elusive. Sen. Joe Manchin, D-W.Va., a key moderate broker, said he's been in touch with White House aides in recent days about supporting the plan, but "I don't see it improving."
"Between the debt and the insensitivity of this doing whatever they can to make sure that people at the top of the food chain are getting the tax breaks and the people who benefit the most are the people who need it the least – it makes no sense," Manchin said.