Senate Republicans Eye Changes to House GOP’s Massive Tax Bill

Senate Republicans will push for changes before throwing their full support behind a tax bill the House Ways and Means Committee advanced Wednesday morning.

President Donald Trump’s signature economic package still faces hurdles in the House—and unanswered questions about the state and local tax deduction cap—but could get a House vote as soon as next week. Once in the Senate, lawmakers say they’re planning changes so the bill adheres to chamber rules and also addresses items for members on the fence.

“We’re the Senate, of course we will,” said moderate GOP Sen. Lisa Murkowski of Alaska.

Republicans have floated changes with House policy decisions on issues ranging from the child tax credit to energy credit clawbacks, and even pieces in the international tax code. Senate Finance Committee Chair Mike Crapo (R-Idaho) hasn’t committed to whether the Senate will hold a markup to consider the bill or take it directly to the floor.

“I think you’ll see a significant amount of overlap but there will be differences,” Crapo said. “We’ve been working very closely together to get our work product as close together as we can.”

Republicans are using the expedited budget reconciliation process to muscle their bill to Trump’s desk without Democrats’ input. Doing so means the party must contend with Senate precedent known as the Byrd rule, which puts tight limits on what can be in the legislation and might mean some House provisions will be stripped.

“The first thing we’ll have to do is see if it complies with Senate rules,” said Sen. John Cornyn (R-Texas). “And so we’ll see what’s left after that, and then we’ll build from there.”

Cornyn said he and other GOP lawmakers expect that whatever the Senate ultimately advances will need to return to the House for final approval.

International Tweaks, Child Tax Credit

Several lawmakers haven’t yet committed to supporting the reconciliation bill, including Sen. Josh Hawley (R-Mo.), who said he has problems with multiple House bill provisions—including those related to Medicaid, AI regulation, and the child tax credit.

Hawley has proposed raising the credit from the current $2,000 maximum to $5,000 for some children.

“I would hope we can expand it,” Hawley said.

Several senators said Wednesday there will be changes in international provisions such as the tax on Global Intangible Low-Taxed Income, which Senate lawmakers championed in 2017.

“Yes, we are absolutely looking” at changes on that front, said Sen. James Lankford (R-Okla.).

Similarly, Sen. Thom Tillis (R-N.C.) wants tweaks on the international side.

There’s also a question about whether a retaliatory measure against “unfair” foreign taxes will survive in the Senate.

The measure creates another section of the tax code that would increase taxes on foreign-owned companies operating in the US whose parent countries levy certain taxes on US businesses.

Jason Smyczek, a principal at Deloitte’s Washington National Tax practice, said that if signed into law, the measure could chill foreign investment in the US—economic activity that the Senate cares about.

“I would expect the Senate to at a minimum make changes” to the retaliatory part of the House bill, Smyczek said.

Some House Republicans who weren’t in Congress when the 2017 tax law was passed might be in for a surprise when they see the Senate’s fingerprints on their legislation, said House Appropriations Chair Tom Cole (R-Okla.).

But if the Senate makes changes, they’ll need to be cognizant of the balance needed to pass muster with both moderates and debt hawks.

“You’re not going to shut the Senate out entirely,” Cole said.