With Business Tax Package Stalled, Some in GOP Say Wait for 2025

Senate Republicans are digging their heels in on demands for changes to the $78 billion tax package currently stuck in the chamber, and some say they might get a better deal if they wait another year.

A standstill in the Senate over the business-and-child tax break bill dragged into its fifth week, after an overwhelming bipartisan vote of approval by the House Jan. 31. Some positions seemed to have hardened with the parties trading accusations of negotiating in bad faith, and talking past each other.

Senate Finance Committee Ranking Member Mike Crapo (R-Idaho) told reporters he’s still working on surveying his caucus on what tweaks would deliver a majority of Senate GOP support for the bill. Senate Finance Chair Ron Wyden (D-Ore.) said he wants a list of the demands and a description of the process Republicans will support.

Some Senate Republicans, though, see a better chance to get their priorities over the finish line in 2025, when they may gain control of the Senate and the White House. That’s also the year major tax talks will ramp up, with much of the Republicans’ 2017 tax bill known as the Tax Cuts and Jobs Act up for renewal.

“That was my question for Senator Crapo: Are we in a better position negotiating with you as chairman next year?” said Sen. John Cornyn (R-Texas), a member of the Finance Committee who’s running for Republican leadership. “I believe we’re in a stronger position next year.”

The fate of the tax bill came up at the Senate GOP Wednesday lunch, several senators said. Sen. Todd Young (R-Ind.) said Republicans are “counting noses,” and Sen. Kevin Cramer (R-N.D.) said he thinks most members want to try to get something done this year, but will look to next year if negotiations don’t work out.

The goal, Cramer said, is to try to get 25 or more Senate Republicans on board, rather than just the handful who’ve already indicated they would support the package.

That package includes a trio of tax breaks for research and development, interest, and capital expenses, paired with an expansion of the child tax credit.

GOP Gripes

Work requirements as part of the child tax credit provision is the biggest hurdle for getting a majority of GOP backing, said Sen. John Hoeven (R-N.D.).

“If we can’t get some of these changes that we really think we need now, there is some incentive to have this negotiation in the broader discussion of renewing the Tax Cuts and Jobs Act,” Hoeven told reporters Wednesday after the lunch.

Some Republicans are still calling for the bill to go through a committee markup, causing further delays and a reroute back to the House, to address the changes some lawmakers want. While Wyden said on Wednesday that Republicans have only given an “amorphous smorgasbord” of possible amendments to the tax package, Crapo said, “there’s nothing amorphous about it.”

Crapo said Tuesday his top issue is getting the child tax credit “lookback” provision dropped. The measure allows taxpayers with no income in a given year to be eligible for the credit if their prior year income met the threshold.

Sen. Thom Tillis (R-N.C.) has opposed the bill in part because it uses a crackdown on the fraud-ridden Employee Retention Credit as an offset as well as the cost of the child tax credit provisions. Tillis told reporters Tuesday he’s also concerned about the GOP’s negotiating position with the 2025 tax cliff, noting that many of the expiring provisions of the 2017 tax law aren’t Democratic priorities.

“Right now in its current form, I’ll do everything I can to prevent it” from passage, Tillis said.

Cornyn, too, said he’d like to see changes to the funding mechanism.

Sen. John Kennedy (R-La.) also on Tuesday called for a markup, saying the bill’s negotiators made a “huge mistake” in moving ahead with the legislation without Crapo’s support. Wyden and his House negotiating partner House Ways and Means Chair Jason Smith (R-Mo.) have said they included Crapo in talks.

“Every dog has its day, and that dog’s barking right now, and growling a little bit,” Kennedy told reporters Tuesday, adding that the bill is “a long way from passing the United States Senate—I can tell you that.”

Others want provisions like traditional tax extenders or technical corrections to the bipartisan retirement law, Crapo has said. Sen. James Lankford (R-Okla.) said Wednesday he’s continuing to talk with Wyden about his bill on non-itemized charitable contribution deductions.

If there’s an agreement on getting to a more “modest” child tax credit, then there might be a deal, Cramer said. While there is a sense that Republicans could get a better deal next year, Cramer said he’s still open to passing a package this year.

“I don’t think our leverage gets worse, as conservatives,” Cramer said.

—With assistance from Erik Wasson (Bloomberg News) and Ellen M. Gilmer (Bloomberg Government).