The Senate Finance Committee held a contentious hearing in late April over the impact of the Tax Cuts and Jobs Act (TJCA) to taxpayers and the economy. The partisan disagreement reinforced how difficult it will be for lawmakers to agree on either technical corrections or extensions of the expiring portions.
Democrats and their witnesses claimed that companies were using the tax cuts primarily to pay for stock buybacks, and that wealthy taxpayers were benefiting the most from the bill. Republicans countered by pointing to strong economic growth numbers and news of employee bonuses and increased hiring.
Polls have shown Americans split over TCJA, and both parties appear willing to use the issue as part of their platform for the November elections. House Ways and Means Chair Kevin Brady, R-Texas, is pushing to have a vote on tax reform follow-up bill before the election. He said the bill would make the individual changes permanent and could include improvements to education and retirement incentives.
Democratic opposition to the TCJA makes any further legislation extremely unlikely. Republicans cannot use reconciliation to make the individual tax changes permanent, meaning they would need at least nine Democratic votes to pass any such legislation in the Senate. This appears all but impossible, and any House vote on a second tax reform bill would likely be largely symbolic.
Treasury Secretary Steven Mnuchin said the administration prefers to wait until after the November elections before pushing legislation to make the individual changes to TCJA permanent. But even if Republicans hold onto the House majority, it appears unlikely they can gain the nine seats in the Senate needed to make permanent tax cuts outside reconciliation.
Democrats have shown slightly more flexibility on technical corrections. They agreed to fix a TCJA provision that provided a bias toward grain cooperatives, but have otherwise opposed most changes. Their firm opposition to the underlying bill in the latest hearing confirms that they are unlikely to help Republicans fix issues without significant concessions. Taxpayers should not expect Congress to pass a full package of technical corrections any time in the near term.
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