Analysis: Doug Jones victory in Alabama will likely speed up Republican tax train
WASHINGTON - Don't look for the Alabama earthquake to knock the tax train off its tracks in Washington.
Even as Democrat Doug Jones notched a once-unthinkable victory in the reddest of states Tuesday, Congressional Republicans continued to chug toward a breakthrough agreement on their sweeping rewrite of the tax code.
They remain on pace to finish that work before the Christmas break. Jones' win, meanwhile, won't be certified by the Alabama Secretary of State until Dec. 26 at the earliest, meaning he probably won't be sworn in until next year. Then, the Alabama Democrat will cut the Republican margin in the upper chamber to a single vote. But if the Republicans hew to their timetable, the ink of the president's signature on a tax package will long since have dried.
As they race to finish that work, Republicans are moving to tilt the package more heavily in favor of the wealthy.
House and Senate negotiators are nearing agreement on an even deeper cut to the top marginal rate for individuals than either chamber's version proposed. Their blended package - the contours of which began emerging Tuesday - would chop the rate for the highest earners from 39.6 percent to 37 percent (the House bill left the current top rate in place but bumped the income threshold for it from $470,700 to $1 million; the Senate bill scrapped that rate and replaced it with a 38.5 percent rate for income above $1 million).
From The Post's Erica Werner and Damian Paletta:
"The move, which would still need to gain the support of enough Republican lawmakers in both the House and Senate, follows complaints from wealthy taxpayers in New York and elsewhere that their taxes could go up under the legislation because of other changes it makes to the code. It also follows pressure from conservative House Republicans who complained the tax plan did not do enough to bring down top rates.
"Importantly, the changes would go far beyond addressing the complaints of wealthy New Yorkers and Californians and would lower taxes for top-earners across the country."
For what it's worth, Sen. John Thune, R-S.D., a member of the conference committee, said Republicans aim to maintain the Senate bill's distribution of benefits across income brackets. Sens. Susan Collins, R-Maine, and Marco Rubio, R-Fla., nevertheless are expressing resistance to lowering the top rate.
The tax talks remain fluid, but the developing framework includes:
- Walking back the proposed cut to the corporate rate by one point, to 21 percent, saving $100 billion.
- Capping the mortgage interest deduction at $750,000 for new home loans, splitting the difference between House and Senate approaches.
- Giving owners of pass-through businesses with up to $500,000 in income a 23-percent deduction, per the Wall Street Journal.
Other major differences - the treatment of corporate earnings abroad, the size of a child tax credit prioritized by Rubio, and limitation of write-offs for state and local taxes - must still be hashed out. But they are overshadowed by the agreements among Republicans: That the corporate rate should be deeply slashed, that it's appropriate to put up to $1.5 trillion on the nation's credit card to pay for the whole thing, and that speed is of the essence in getting it all done.