Johnson says he will not support tax-reform bill

Johnson says he will not support tax-reform bill
© Greg Nash

Sen. Ron JohnsonRonald (Ron) Harold JohnsonSenate GOP urges Trump administration to work closely with Congress on NAFTA Continued efforts to pass 'right to try' legislation should fail GOP, Dem lawmakers come together for McCain documentary MORE (Wis.) on Wednesday said he would oppose the Senate GOP’s tax package, becoming the first Republican senator to stand against the top legislative priority for his party.

Johnson said he couldn’t back the bill unless it was changed to help “pass-through” businesses that he said take a backseat to corporations in the measure as written.

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“These businesses truly are the engines of innovation and job creation throughout our economy, and they should not be left behind,” he said in a statement. “Unfortunately, neither the House nor Senate bill provide fair treatment, so I do not support either in their current versions.”

Johnson has long argued that pass-through businesses would be treated less favorably than corporations under the GOP tax bills. Pass-through businesses have their income taxed through the individual income tax rates, rather than paying the corporate rate. 

A GOP tax framework this fall would have included a maximum 25 percent tax on pass-through businesses, but that was not included in the Senate bill.

Despite Johnson’s statement, Republicans generally appeared to have momentum on the tax bill.

The House seems set to approve its tax-reform measure on Thursday, while Senate Republicans were coalescing around their new bill, which now includes the controversial repeal of ObamaCare’s individual insurance mandate.

Sen. Susan CollinsSusan Margaret CollinsPressure rising on GOP after Trump–DOJ fight’s latest turn Trump's plan to claw back spending hits wall in Congress Dem rep to launch discharge petition to force net neutrality vote in House MORE (R-Maine) is the only GOP senator publicly voicing concerns about the individual mandate provision, saying it was a “mistake” to mix the issues of tax reform and health care. 

“This is going to be difficult, and I just don’t know why they had to complicate it by bringing up the [Affordable Care Act],” Collins said.

She didn’t say she would vote against the package, however, and even if she does, Republicans could still clear the package through the Senate if they can keep the number of defections to two and have Vice President Pence to break a tie.

Johnson’s support also does not appear unattainable.

The Wisconsin senator previously announced opposition to the GOP’s ObamaCare repeal bill earlier this year before voting with his party in a series of votes, and Senate Majority Whip John Cornyn (R-Texas) appeared confident he could be reeled in.

“Good news: Senator Johnson will work with colleagues with a goal of improving the bill to a form he can support,” he said on Twitter, reacting to Johnson’s statement.

Two other Republicans to watch are Sens. John McCainJohn Sidney McCainOvernight Defense: Pompeo lays out new Iran terms | Pentagon hints at more aggressive posture against Iran | House, Senate move on defense bill Senate GOP urges Trump administration to work closely with Congress on NAFTA Sarah Sanders: ‘Democrats are losing their war against women in the Trump administration’ MORE (Ariz.) and Lisa MurkowskiLisa Ann MurkowskiKeeping Pruitt could cost GOP Congress, Trump in the fall Trump's plan to claw back spending hits wall in Congress GOP, Dem lawmakers come together for McCain documentary MORE (Alaska), who were both no votes in July on ObamaCare repeal.

“I want to see the whole package before I decide,” McCain said repeatedly on Wednesday.

Murkowski said she was busy with legislation to allow drilling in the Arctic National Wildlife Refuge (ANWR) and has yet to focus on the tax bill.

The Alaskan senator might be less likely to vote against the tax bill given its link to drilling in ANWR, a top priority for Murkowski. The GOP budget asked the Senate Energy and Natural Resources Committee, led by Murkwoski, to find $1 billion in revenue to help pay for tax reform. The Congressional Budget Office says ANWR will bring in $1 billion, so it’s possible it could be added into tax reform to meet the $1 billion mark. 

Democrats ripped Republicans over the decision to inject the mandate issue into the tax fight on day three of the Senate Finance Committee markup of the bill.

“This tax bill is now officially a health-care bill,” said Sen. Ron WydenRonald (Ron) Lee WydenHillicon Valley: Facebook, Google struggle to block terrorist content | Cambridge Analytica declares bankruptcy in US | Company exposed phone location data | Apple starts paying back taxes to Ireland Firm exposes cell phone location data on US customers Overnight Finance: Watchdog weighs probe into handling of Cohen bank records | Immigration fight threatens farm bill | House panel rebukes Trump on ZTE | Trump raises doubts about trade deal with China MORE (Ore.), the panel’s ranking Democrat.

Throughout the markup, Democrats repeatedly cited an analysis from the nonpartisan Congressional Budget Office finding that repealing the mandate would increase the number of people without health insurance by 13 million in 2027 and increase average premiums by about 10 percent in most years compared to baseline projections.

Collins told reporters that she presented data to her GOP colleagues on Wednesday that shows that some middle-income individuals and families would see insurance premium spikes from the mandate’s repeal that would be greater than the value of their tax cuts.

It appeared the Collins argument held little sway with her GOP colleagues, however, who are instead suggesting that separate legislation from Sens. Lamar AlexanderAndrew (Lamar) Lamar AlexanderSenate GOP urges Trump administration to work closely with Congress on NAFTA GOP lawmakers want Trump to stop bashing Congress The Hill's Morning Report - Sponsored by CVS Health - A pivotal day for House Republicans on immigration MORE (R-Tenn.) and Patty MurrayPatricia (Patty) Lynn MurrayOvernight Health Care — Sponsored by PCMA — Trump official won't OK lifetime limits on Medicaid Dems warn against changes to federal family planning program Overnight Health Care: Drug company under scrutiny for Michael Cohen payments | New Ebola outbreak | FDA addresses EpiPen shortage MORE (D-Wash.) meant to stabilize insurance markets could counteract negative effects of repealing the mandate. That bill would provide payments to insurers to help them provide subsidies for people on ObamaCare, but would also give states more freedom to change insurer requirements under the law.

Democrats, however, said they would not support the bill anymore if it is paired with legislation to repeal the mandate.

“Republican[s] cannot expect to pass their own separate ideological health-care provision and then turn around and ask Democrats to vote to pass Alexander-Murray,” Senate Minority Leader Charles SchumerCharles (Chuck) Ellis SchumerOvernight Finance: Trump signs repeal of auto-loan policy | Justices uphold contracts that bar employee class-action suits | US, China trade war 'on hold' Free traders applaud Trump as China tariff threat recedes The Hill's 12:30 Report — Sponsored by Delta Air Lines — Frenzy over Kennedy retirement rumors | Trump challenges DOJ MORE (D-N.Y.) said in a floor speech.

Republicans said repealing the individual mandate would provide tax relief to the middle class, pointing to IRS data that shows most people paying the penalty for not buying insurance are low- and middle-income taxpayers.

“This tax is one of the most regressive taxes in the entire Internal Revenue Code,” Hatch said.

In addition to blasting Republicans for repealing the individual mandate, Democrats also attacked the modified bill for sunsetting the tax cuts for individuals after 2025 while making the cut to the corporate tax rate permanent.

“Bottom line, my colleagues on the other side have now shown their hand. The corporate handouts are permanent, the family breaks aren’t. In fact, they don’t even make it a full decade,” Wyden said.

Hatch made the individual tax credits temporary because of the “Byrd rule” that the bill needs to follow in order to pass on the Senate floor with only a simple majority. Under the Byrd rule, the bill can’t increase the deficit outside of the 10-year budget window.

Hatch said that if Democrats don’t like the temporary nature of the individual tax cuts, they could waive the budget rule on the Senate floor and “they likely won’t get much resistance from the Republican side.”

The modified bill also lowers some of the tax brackets and expands an existing child tax credit. The latter change won the support of Sens. Marco RubioMarco Antonio RubioRubio: Kaepernick deserves to be in the NFL Congress — when considering women’s health, don’t forget about lung cancer Anti-Maduro Venezuelans not unlike anti-Castro Cubans of yore MORE (R-Fla.) and Mike LeeMichael (Mike) Shumway LeeSenate GOP urges Trump administration to work closely with Congress on NAFTA Senate panel advances Trump's CIA nominee Doug Jones to oppose Haspel as CIA chief MORE (R-Utah) as Republicans seek a path to 51 votes.