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Republicans hunt for ways to pay for tax cuts

WASHINGTON — House and Senate Republicans faced a new round of uncertainty Thursday about the fate of their $1.5 trillion tax bill with the possible defection of a Republican senator, Marco Rubio of Florida, amid continuing questions about how the bill will be paid for and how much of the benefits will flow to low- and middle-income people and how much to corporations.

Republicans, who reached agreement Wednesday on a merged version of the House and Senate tax plans, expect to unveil the final bill Friday and vote on the legislation early next week so that it can be sent to President Trump before Christmas.


But those plans were thrown into some disarray Thursday when Rubio said that he would vote no on the bill unless it included a more generous version of the child tax credit, which he and another Republican senator, Mike Lee of Utah, have been pushing for to benefit lower-income individuals.

“I think my requests have been pretty reasonable and consistent and direct,” Rubio said. A spokesman for Lee said he was undecided on the bill.

Rubio and Lee have been pressing Republican leaders to expand the child tax credit to make it more generous for low-income families. That change would further drive up the cost of the tax bill, which can add no more than $1.5 trillion to federal deficits over a decade if the bill is to pass without Democratic support.

In a tweet Thursday afternoon, Rubio needled Republican leadership, saying “Tax negotiators didn’t have much trouble finding a way to lower” the top tax bracket and to have the corporate tax cut take effect a year early.

Republican negotiators responsible for merging the two bills have made a host of changes to assuage the concerns of businesses and some fellow lawmakers. Those tweaks, which include eliminating the corporate alternative minimum tax and dropping the top individual tax rate to 37 percent from the current rate of 39.6 percent, are expected to drive up the cost of the bill and will need to be paid for to stay in the $1.5 trillion box.


“We’re literally trying to squeeze about $2 trillion in tax reform into a $1.5 trillion box and that’s been a problem,” GOP Senator Ron Johnson of Wisconsin said earlier this week. Johnson held out on supporting the initial version of the Senate tax bill until it gave more generous tax breaks to so-called pass-through businesses, whose owners pay taxes on profits through the individual code.

Republican lawmakers have so far said little about how the final version of the legislation will be paid for, other than agreeing to nudge the corporate tax rate to 21 percent from the 20 percent in both the Senate and House bills. (The present tax rate is 35 percent.) One idea under consideration, according to North Carolina Senator Thom Tillis, is raising the tax rate on profits that companies have parked overseas.

But on Thursday, Republicans were running out of time to make changes and showed little patience for acceding to new demands. Representative Kevin Brady of Texas, chairman of the Ways and Means Committee, cast doubt on further altering the child tax credit.

“We’re at 11:59 on the clock and really the pens ought to be down,” he said on CNN.

Senator Rob Portman, an Ohio Republican and member of the House-Senate committee that negotiated the final tax bill, said the Senate had already battled the House to preserve the Senate’s more generous version of the child tax credit, which doubled to $2,000, with $1,100 of that amount refundable and able to be claimed by families who face no federal income tax liability.


“We’ve already won,” Portman said. “We should take our victory.”

At the White House, Trump predicted that Rubio would “be there” on the tax bill, and the White House press secretary, Sarah Huckabee Sanders, pledged to keep working with the senator “until we get the job done.” But she, too, highlighted the expansion of the child tax credit that had already been passed in the Senate’s tax bill, even if it fell short of what Rubio wanted to see in the final version.

“We think he should be very excited about the progress we’ve made on that front,” she said.

The last-minute demand by Rubio demonstrates the leverage individual Republican senators have in the final moments of the tax debate. With a narrow 52-48 majority, Republicans can afford to lose only two of their members if they are to pass the bill along party lines. One Republican senator, Bob Corker of Tennessee, voted against the Senate tax bill.

Other concerns are also looming, including the health of two Republican senators, John McCain of Arizona and Thad Cochran of Mississippi.