Rubio to vote against tax bill unless child credit expanded

WASHINGTON – Sen. Marco Rubio, R-Fla., threatened Thursday to vote against Republicans' $1.5 trillion tax overhaul unless it further expands a child tax credit to millions of working families, leaving GOP leaders searching for answers on a final deal that had appeared on the verge of sailing through the House and Senate.

Rubio, along with Sen. Mike Lee, R-Utah, wants Republican leaders to include the expansion as they reconcile separate tax measures passed by the House and Senate, working to craft a final compromise bill that could pass both chambers and be sent President Trump for his signature.

GOP leaders had said Wednesday they believed that they had reached a broad agreement both chambers could pass, and they planned to unveil the package Friday morning with hopes of voting on it early next week. But opposition from Rubio and perhaps Lee – who has not yet decided whether to support the bill, a spokesman said Thursday – could delay or derail the tax effort.

Rubio says it's imperative that the GOP make its plan more generous for working families, especially as lawmakers repeatedly revise it to strengthen benefits for the wealthy and corporations.

"I understand that this is a process of give and take, especially when there's only a couple of us fighting for it, the leverage is lessened," Rubio said Thursday in the Senate. "But given all the other changes made in the tax code leading into it, I can't in good conscience support it unless we are able to increase [the child tax credit], and there's ways to do it and we'll be very reasonable about it."

Individual Republican senators have significant influence over the plan as the party works to move it through the Senate while holding only a narrow majority. Republicans control 52 Senate seats and need 50 votes to pass the tax bill, as Vice President Mike Pence could be called on to break a tie. Pence's staff on Thursday announced he would postpone a planned trip to Israel and Egypt next week to be available for the tax vote.

Sen. Bob Corker, R-Tenn., who voted against the Senate version of the bill because of its projected additions to the deficit, says he's reviewing the final version but is expected to oppose it as well. With Democrats unanimously opposed to the plan, Republicans can afford to lose no more than two members of their caucus in a final vote.

Top Republicans expressed hope Rubio could eventually be won over.

"He's really been a great guy, very supportive," Trump said while taking questions after a speech. "I think that Senator Rubio will be there."

"Well, we're concerned about it," Senate Finance Committee Chairman Orrin Hatch, R-Utah, said of Rubio's request. "But you know, we've got to deal with the art of the doable. But I think we can resolve that problem. I sure hope so."

The change Rubio is seeking would add tens of billions of dollars in new tax breaks for millions of low-income and working-class families, further squeezing negotiators as they struggle to comply with Senate rules that block the bill from adding more than $1.5 trillion over a decade to the national deficit.

Earlier Thursday, Hatch said the party was considering a plan that would shorten the duration of the bill's planned tax cuts for individuals, a change that would cut the measure's overall tax breaks for middle-class and working-class families.

The shortened duration would free up more revenue Republicans could use to pay for new tax breaks they're adding in the compromise package to their overhaul, but it could also heighten complaints that the bill prioritizes cuts for corporations over households.

The additional revenue is needed because Republicans are seeking to lower the top tax rate paid by wealthiest Americans, ratchet back proposed curbs on the deductions of state and local taxes, and scale back proposed tax rules for investment income. All of these changes are expected to add more than $200 billion to the cost of the bill, which is one reason GOP leaders have said they don't have much flexibility to address Rubio's demands.

Under of the Senate version of the tax plan, many of the cuts and credits for individuals are set to phase out in 2025, but Republicans are considering moving the expiration date to 2024.

Republicans have said that the expiring tax cuts for families and individuals would eventually be extended by a future Congress because they will prove popular, but they need to make them temporary to comply with budget rules.

The backbone of the Republican tax plan is a massive cut to the corporate tax rate, but it would also pare an inheritance tax paid almost exclusively by the very wealthy and cut taxes for millions of other businesses – ranging from small stores to large, wealthy firms – that pay taxes through the individual tax code. Individuals, including the middle class, working class and poor, would see more uneven benefits, with many getting a tax break but some losing out as the breaks expired or certain deductions were shrunk or eliminated.

Republicans, including Trump, have touted their plan as a middle-class tax cut, but by further shortening the duration of individual tax cuts while leaving most corporate rate cuts permanent, the GOP could bolster Democrats' argument that the package is tilted in favor of the wealthy and corporations.

Nonpartisan analysts have supported that assessment of the GOP plan, and polling suggests the public broadly shares that perception.

Trump and Rubio have a history. They faced off during the GOP primary in 2015 and 2016 and launched nasty, personal attacks against each other. Rubio is seen as considering a future presidential run. He has never fully embraced the type of bare-knuckle politics that Trump likes to employ, even saying later he regretted efforts during the campaign to mirror Trump's attacks.

Rubio and Lee hope their proposed change to the child tax credit would address some of those concerns by giving more credits to the low-income families.

The Republican plan would increase the child tax credit from up to $1,000 per child under existing law to up to $2,000. But Rubio and Lee want to change the credit's rules to extend additional benefits to families who pay payroll taxes but do not make enough to owe any income tax.

Rubio has been negotiating with the GOP leaders tasked with crafting the final bill, and on Wednesday they said they could increase the tax credit in the final bill by about $13 billion, according to a person with knowledge of the private negotiations. Rubio had pressed for the tax credit to be bolstered by, at a minimum, between $30 billion and $40 billion.

Frustrated by leadership's counteroffer, Rubio told party leaders late Wednesday night he planned to vote against the GOP tax plan. Sen. Tim Scott, R-S.C., one of the conferees, intervened in bid to keep Rubio negotiating – an effort Scott continues to pursue.

By Thursday afternoon, as the discrepancy remained unresolved, Rubio announced publicly that, without a more robust credit, he would vote "no."

Party leaders still hope to roll out their credit by Friday morning, in part to remain on pace to meet Trump's request that Congress send him a tax-cut bill by Christmas. That timeline gained new urgency Tuesday when Democrat Doug Jones defeated Republican Roy Moore in an Alabama special election for a U.S. Senate seat. Despite Democrats' demands for a delay, Republicans expect to be able to pass their tax bill before Jones replaces Sen. Luther Strange, R-Ala., this month or early next month.

In threatening to vote down the tax plan, Rubio is reopening a fight he and Lee lost on the Senate floor earlier this month.

The pair proposed a change to the Senate bill that would have expanded the credit, but it was opposed by Senate leadership and voted down.

During the Senate debate, Rubio and Lee proposed funding the expanded credit by slightly shrinking the plan's proposed cut to the corporate tax rate, from a proposed 20 percent to, eventually, just below 21 percent. Under current tax law, the corporate rate is 35 percent.

But in opposing the Rubio-Lee plan, Republican leaders said they need to keep the corporate tax rate at 20 percent to help U.S. companies compete globally. But in their talks to reconcile the House and Senate bills, GOP leaders have a tentative agreement to raise the rate to 21 percent – largely to pay for a tax cut for wealthy individuals.

In an interview Thursday, Rubio noted that negotiators had found a way to fund other proposed changes to the tax plan.

"My concern is that if you found the money to lower the top rate and you found the money to add a year [to the corporate rate reduction], you can't find a little bit to at least somewhat increase the refundable portion of it?" he said.