Is the tax bill in trouble again? Two days ago, Bob Corker offered a dramatic reversal to his opposition to the GOP tax reform bill that previously drew a nay vote from the retiring Senator. The country would be better off with the bill than without it, Corker announced, even despite its flaws.
Over the weekend, International Business Times reporters determined that at least one person would be better off with the new version … Bob Corker. And another would be Donald Trump:
President Donald Trump has made tens of millions of dollars of a specific kind of income that could be subjected to a last-minute tax break inserted into the Republicans’ tax legislation released Friday, according to federal records reviewed by International Business Times. The same is true for Tennessee GOP Sen. Bob Corker — a commercial real estate mogul who suddenly switched his vote to “yes” on the tax bill after the provision was added to the legislation. Previously, Corker was the only Republican to vote against the Senate version of the bill. …
The reconciled tax bill includes a new 20 percent deduction for so-called “pass-through” entities, business structures such as LLCs, LPs and S-Corporations that don’t pay corporate taxes, but instead “pass through” income to partners who pay individual tax rates on that money. The Senate version of the bill included safeguards that would only allow businesses to take advantage of the new break if they paid out significant wages to employees. But the new provision, which wasn’t included in either version of the bill passed by the House and Senate, and was only added during the reconciliation process, gives owners of income-producing real estate holdings a way around that safeguard, effectively creating a new tax break for large landlords and real estate moguls.
This component of the tax reform bill comes directly from earlier opposition from Sen. Ron Johnson (R-WI) to the original House version. Johnson demanded that pass-through entities get the same treatment as regular corporations, calling the former the “engines of innovation and job creation.” It shouldn’t come as a surprise that the conferees addressed Johnson’s concerns in the final bill, nor that they did so by normalizing the approach between different types of business structures. That was Johnson’s whole point, and Republicans need Johnson to stay on board.
What is surprising is that Corker got surprised by it. When first approached by IBT about the new clause in the tax bill, Corker responded by saying he hadn’t read the bill before endorsing it:
But the senator denied any knowledge of the so-called “Corker kickback.” Corker said he hadn’t even read most of the bill.
“I had like a two-page summary I went through with leadership,” Corker told the International Business Times. “I never saw the actual text.”
“I don’t really know what the provision does, to be honest,” Corker told the publication. “I would need an accountant to explain it. I had no knowledge of this.”
That’s not exactly a confidence builder, is it? Now that he’s heard about it, though, Corker is demanding answers from Orrin Hatch:
“My understanding from talking to leadership staff today is that a version of this provision was always in the House bill—from the Ways & Means markup, through House floor consideration—and in reconciling the divergent House and Senate approaches to pass-through businesses this House approach stayed in the final conferenced version,” Corker said.
Corker’s office noted that the senator was not involved in the writing of the legislation and was not a member of the conference committee that crafted it.
“Because this issue has raised concerns, I would ask that that you provide an explanation of the evolution of this provision and how it made it into the final conference report. I think that because of many sensitivities, clarity on this issue is very important and hope that you will respond in an expeditious manner,” he added.
Maybe Corker should talk more with his colleagues. This issue was not unknown, and if he had an issue with it, he could have raised it with Johnson a month ago.
In fact, Hatch’s response makes it clear that this issue has been hashed out for at least that long:
— Sahil Kapur (@sahilkapur) December 18, 2017
One cannot help but note the annoyance in Hatch’s explanation of the process. It’s ostensibly aimed at the media for misrepresenting the change as new rather than an evolution of efforts that began after Johnson’s objections. However, it doesn’t take much imagination to conclude that Hatch is annoyed at Corker himself for not keeping himself informed of the work on the bill before commenting publicly on it. “If you have any further questions, please feel free to contact me” could be Senatese for “why don’t you pick up a phone and check with me before shooting your mouth off?”
This should put an end to Corker’s concerns. If not, this could create a big problem for Mitch McConnell in the vote for the tax reform bill, projected to take place as soon as tomorrow. If Corker decides to flip back to a nay, that leaves McConnell with only 50 votes for the bill on the floor, as John McCain went to Arizona to recuperate from cancer treatment. McCain might be able to be recalled, but while he’s tough, he’s also recuperating for a reason — and it seems doubtful that he’d risk his health to jam a bill through reconciliation after lecturing everyone about regular order all year when it came to ObamaCare repeal.
Unless Corker gets back in line, then, the next Republican defector would kill the bill entirely. And are we very sure that the support from such caucus members as Jeff Flake, Susan Collins, and James Lankford is solid enough to be the 50th vote on this bill? It’s not for nothing that Paul Ryan wants the Senate vote first before putting House members on the line for this bill.