GOP tax bill may meet the same fate as Obamacare repeal in the Senate

The Republican tax package will almost certainly pass the House, perhaps in the next two weeks.

But several GOP Senators are already grumbling about many of its provisions, setting up a scenario where the Senate may once again block the passage of a major element of Donald Trump's agenda.

For some Senators, it's inadequate middle class tax relief. For others, it doesn't give enough to small businesses. Still other Senators are worried about how much the tax cuts will add to the deficit.

But what may be different this time is that the House has invited the Senate to write its own bill, thus setting up what promises to be a contentious conference committee to hash out a bill both chambers can support.

But before we even reach that point, Senate Republicans are going to have to agree on some kind of bill. At the moment, that prospect doesn't look promising.

The Hill:

The legislation is expected to pass the House, starting a tougher battle in the Senate, where Republicans control 52 seats and can’t pass a bill if they suffer more than two defections and Democrats remain unified.

At least a half dozen Senate Republicans have already raised concerns about various proposals in the tax measure, setting the stage for arduous negotiations in the upper chamber.

Senate Republican leaders have assured their colleagues that the Senate Finance Committee will write its own bill and urged them to withhold judgment on the House measure. 

“They’ve told us the House bill is just a shell and we’ll have our own bill. They’ve asked to hold off on commenting and to not pick it apart,” said a Republican senator summarizing the instructions that Senate Majority Leader Mitch McConnell (R-Ky.) gave during a Thursday lunch meeting.

The House Ways and Means Committee unveiled its tax bill Thursday morning. It quickly came under fire for setting a new tax rate for pass-through businesses and for limiting the mortgage interest deduction to the first $500,000 of debt. 

Sen. Ron Johnson (R-Wis.) is not happy with the formula the House bill sets for taxing pass-through businesses, which under current law pay taxes at the higher rates that individuals now pay. 

The House bill would count 70 percent of a pass-through business’s revenue as wages, taxed at the individual rate, with the remaining 30 percent taxed as a return on capital at a new rate of 25 percent.

But Johnson argues that small businesses will wind up paying a blended rate of 35 percent, well in excess of the 20 percent tax rate the House bill sets for big companies classified as C-corps. 

“One issue I know that has to be fixed is the whole issue with pass-throughs,” said Johnson, who called the House language on small business taxation “completely unacceptable.” 

You can expect wrangling like this to go on for weeks. The saving grace of the tax bill is that Republicans think that if they don't pass it, their goose is cooked in 2018. Whether that's true or not is debatable. But it will certainly make candidates' jobs far more difficult and give Democrats a campaign issue - the utter failure of the GOP congress to get anything important done.

Much will depend on the president himself. He failed to make much of an impact on the Obamacare repeal vote. But this time, he is going to have to hit the phones and call in GOP Senators for one on one lobbying. Unless the president is engaged 100% and buys in to specific elements of tax reform, tax legislation will go the way of Obamacare repeal,