By Dan Calabrese ——Bio and Archives--November 28, 2017
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One group, including Ron Johnson (R., Wis.) and Steve Daines (R., Mont.), wants deeper tax cuts for so-called pass-through businesses such as partnerships and S corporations that pay taxes on individual rather than corporate tax returns. Both said they want to prevent large corporations from deducting state and local taxes, freeing up money to drive down rates for pass-through firms. They said they would like to support a tax bill but can’t do so yet. Another group, including Bob Corker (R., Tenn.), Jeff Flake (R., Ariz.) and James Lankford (R., Okla.), is concerned about the $1.4 trillion addition to budget deficits the bill would cause, and these senators are wary that it won’t generate enough economic growth to pay for itself. A third group, including Susan Collins (R., Maine) and John McCain (R., Ariz.), helped kill the Republican health-care bill earlier this year and could pose resistance over a variety of provisions, including plans to repeal the Affordable Care Act’s health-insurance mandate as part of the tax bill. Mr. McCain said Monday that he is still undecided and had “a lot of things” he is concerned about.
Republican leaders were confident they would get the 50 votes they need to pass the bill. But placating all these groups will be challenging, politically and mathematically. Winning over some lawmakers could make others more resistant. The bill would collapse if any three Republicans vote no, assuming no Democratic support.Of the three groups, only Johnson and Daines have a legitimate concern. Because the cut in the corporate tax leaves the top individual rate so much higher than the corporate tax, it will penalize small business owners who pay taxes on their business earnings at the "pass-through" or individual rate. (Disclosure: I'm one of them.) There are ways around that, including a restructuring of your business so you don't pay the pass-through rate, but it wouldn't be that complicated to amend the bill to address the issue. Corker, Flake and Lankford appear to have flunked Supply-Side Economics 101 if they're buying the conventional Beltway analysis that the bill will "add $1.4 billion to the budget deficit." The whole point of this tax cut is the reverse eight years in which we averaged less than 2.0 percent annualized GDP growth. That, not marginal tax rates, is the reason the deficit is so high. (Well, that and spending, which is another conversation we very much need to have.) If these three don't understand the dynamic effect of tax rate cuts, someone needs to sit the down and tell them the story of the 1980s. Then again, if they're not already well versed in that history, why exactly are they Republicans? That brings us to our bestest pals McCain and Collins. Collins is simply a liberal who doesn't like tax cuts or reductions in the size of the federal government's reach and influence. She will look for excuses to oppose the tax cut. And McCain? We all know what he's become: A quintessential swamp creature who disdains the Republican governing philosophy he once claimed to champion because it doesn't make him popular and doesn't get him cushy interviews on television. He's also a bitter old man who seems to especially resent other Republicans who succeeded in their pursuits of the presidency while McCain failed in his. He opposed the Bush tax cuts of 2001 and 2003 because he hated George W. Bush for beating him. He hates Donald Trump for other reasons, and there's no reason to think he'll refrain from using public policy to get revenge for the personal slights he feels he's experienced. He never refrained from doing it before.
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Dan Calabrese’s column is distributed by HermanCain.com, which can be found at HermanCain
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