How Republicans beat the odds on taxes

How Republicans beat the odds on taxes
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Republicans have done what some said was impossible: rewriting the tax code in President TrumpDonald John TrumpAccuser says Trump should be afraid of the truth Woman behind pro-Trump Facebook page denies being influenced by Russians Shulkin says he has White House approval to root out 'subversion' at VA MORE’s first year in office.

“This is a day I’ve been looking forward to for a long time,” Speaker Paul RyanPaul Davis RyanRepublicans are avoiding gun talks as election looms The Hill's 12:30 Report Flake to try to force vote on DACA stopgap plan MORE (R-Wis.) said on Tuesday on the House floor just before the chamber voted. “We are about to achieve some really big things — things that the cynics have scoffed at for years, decades even.” 

The House on Wednesday afternoon sent the tax bill to Trump’s desk, ending a long legislative journey that began after the election and saw many twists and turns along the way.

Reforming the tax code has been a dream of the GOP for years, but past efforts crashed and burned due to fundamental disagreements with Democrats about what the legislation should achieve. Republicans also wrestled among themselves with the tradeoffs needed to pay for lowering tax rates. 

Then the 2016 election came.

“The president changed the terms of the discussion,” said a senior congressional aide. “Trump comes in as a tax cutter.”

Yet even after winning the White House and Congress, Republicans were uncertain of the path forward as they debated, both publicly and privately, what form the tax bill should take.

One of the key questions was whether the bill should be revenue-neutral, with reductions in tax rates canceled out by restricting deductions and tax breaks. Both Ryan and Senate Majority Leader Mitch McConnellAddison (Mitch) Mitchell McConnellLawmakers feel pressure on guns Bipartisan group of House lawmakers urge action on Export-Import Bank nominees Curbelo Dem rival lashes out over immigration failure MORE (R-Ky.) had vowed the bill would be revenue-neutral, but other Republicans were pushing for a net tax cut.  

The fight was resolved in September, when Sens. Pat ToomeyPatrick (Pat) Joseph ToomeyTop GOP candidate drops out of Ohio Senate race Newly declassified memos detail extent of improper Obama-era NSA spying Overnight Tech: FCC won't fine Colbert over Trump joke | Trump budget slashes science funding | Net neutrality comment period opens MORE (R-Pa.) and Bob CorkerRobert (Bob) Phillips CorkerCongress punts fight over Dreamers to March Drama surrounding Shulkin — what is the future of VA health care? Blackburn pushes back on potential Corker bid: 'I'm going to win' MORE (R-Tenn.) reached an agreement on a budget resolution that would allow the tax legislation to add $1.5 trillion to the deficit.

Without that agreement, the senior congressional aide said, Republicans would have had to pass a less sweeping tax bill — if they were able to pass one at all.

“It was important and it got us started off in a place where the caucus could work together,” Corker said.

Ryan had pushed for revenue-neutral tax reform as part of his “Better Way” election platform, which was the basis for the original tax blueprint House Republicans released in June 2016.

The plan met fierce opposition from parts of the business community because of a provision that would create border-adjustment of taxation. 

The proposal would have subjected imports to U.S. tax while exempting exports, raising more than $1 trillion in revenue for the government.

Ryan and Rep. Kevin BradyKevin Patrick BradyTrump gets recommendation for steep curbs on imported steel, risking trade war Business groups pressing for repeal of ObamaCare employer mandate Watchdog: IRS issued bonuses to employees with conduct issues MORE (R-Texas), chairman of the House Ways and Means Committee, fought for months to keep the provision, calling it a natural outgrowth of Trump’s promise to prioritize job creation and manufacturing in the United States. 

But from the start, the White House was lukewarm on border adjustment, leaving it out of a one-page tax plan that Trump released in April. 

After a series of meetings between key players in the White House, House and Senate, Republicans in July agreed to abandon border adjustment — a key step that united business and conservative groups behind the broader tax push.

But some divisions among Republicans remained, including over tax rates and what changes should be made to popular credits and deductions in the tax code. 

One of the biggest pressure points came in the House, where members from high-tax states such as New York, New Jersey and California balked at a push from GOP leaders to eliminate the deduction for state and local taxes. They warned ending the deduction would be devastating for their constituents. 

In the end, the final bill capped the state and local deduction at $10,000 — still not satisfactory to many of those members, but enough to prevent a full-scale revolt that could threaten passage.  

Another sticking point for the bill came on ObamaCare’s individual mandate to have health insurance. 

The conservative Republican Study Committee pushed hard for the repeal of the mandate to be in the tax bill, with senators like Rand PaulRandal (Rand) Howard PaulDem wins Kentucky state House seat in district Trump won by 49 points GOP's tax reform bait-and-switch will widen inequality Pentagon budget euphoria could be short-lived MORE (R-Ky.), Tom CottonThomas (Tom) Bryant CottonGOP looks for Plan B after failure of immigration measures Senate rejects Trump immigration plan Our intelligence chiefs just want to tell the truth about national security MORE (R-Ark.) and Mike LeeMichael (Mike) Shumway LeeThe 14 GOP senators who voted against Trump’s immigration framework Prison sentencing bill advances over Sessions objections Grassley ‘incensed’ by Sessions criticism of proposed sentencing reform legislation MORE (R-Utah) calling for that step as well. Trump joined in, tweeting his desire for mandate repeal to be included.

Repealing the mandate ultimately made it into the bill, producing about $300 billion in budget savings that helped Republicans pay for the tax cuts. 

“This is going to be icing on the cake for us. It really is,” Republican Study Committee chairman Mark WalkerBradley (Mark) Mark WalkerFlorida shooting reopens CDC gun research debate Right revolts on budget deal Judge overturns ex-felon voting rights process in Florida MORE (R-N.C.) said of the ObamaCare provision. 

The Senate also incorporated ideas from several members before passing its version of the tax bill. 

After Sens. Ron JohnsonRonald (Ron) Harold JohnsonTrump spars with GOP lawmakers on steel tariffs Overnight Regulation: Trump unveils budget | Sharp cuts proposed for EPA, HHS | Trump aims to speed environmental reviews | Officials propose repealing most of methane leak rule Trump budget seeks savings through ObamaCare repeal MORE (R-Wis.) and Steve DainesSteven (Steve) David DainesThe 14 GOP senators who voted against Trump’s immigration framework Week ahead: Lawmakers weigh border patrol access on federal lands Senate Republicans call on Trump to preserve NAFTA MORE (R-Mont.) threatened to vote against the legislation out of concerns that it didn’t do enough to help pass-through businesses, senators bumped up the deduction the bill provides for income from those companies. Leaders also included several amendments requested by Sen. Susan CollinsSusan Margaret CollinsOvernight Tech: Judge blocks AT&T request for DOJ communications | Facebook VP apologizes for tweets about Mueller probe | Tech wants Treasury to fight EU tax proposal Overnight Regulation: Trump to take steps to ban bump stocks | Trump eases rules on insurance sold outside of ObamaCare | FCC to officially rescind net neutrality Thursday | Obama EPA chief: Reg rollback won't stand FCC to officially rescind net neutrality rules on Thursday MORE (R-Maine).

Even after both chambers passed their versions of the tax measure, Republicans continued to make revisions to prevent defections.

The refundable amount of the child tax credit was increased from $1,100 to $1,400 after Sen. Marco RubioMarco Antonio RubioColbert: Students taking action on gun violence 'give me hope' Lawmakers feel pressure on guns Florida lawmaker's aide fired after claiming shooting survivors were 'actors' MORE (R-Fla.) threatened to oppose the bill. And the $10,000 cap on state and local taxes was expanded from just being for property taxes to applying to income and sales taxes as well, in an effort to secure the votes of some Republicans from high-tax states.

Trump helped to sell the tax plan to the public in a series of speeches, but the White House also gave GOP leaders space, allowing them to fine-tune the details of the legislation until it had enough votes to pass.

Corker, who voted against the first Senate tax bill due to concerns about adding to the deficit, came around to supporting the final package after going through a self-described “long, arduous process.” 

He said he changed his mind about voting against the bill on Friday morning after having conversation with various experts and constituents, including Douglas Holtz-Eakin, the former Congressional Budget Office director, who reassured Corker with a variety of different economic and budget projections for the bill. 

"I talked with people around the country. I called the larger chambers of commerce throughout our state, I talked to the head of our economic and community development for the state of Tennessee. I talked to people that I really respect around the country on both sides of the aisle, just on the overall good for our country," Corker said.

Looming over the entire process on taxes was Republicans’ failed effort to repeal and replace ObamaCare. 

Rank-and-file members resented the top-down approach taken on health-care legislation, and GOP leaders learned from their mistakes. 

Leadership and the tax-writing committees took an inclusive approach to drafting the tax bill, discussing the issue regularly with rank-and-file members.

“I think we learned from the debacle roll out of the repeal of the [Affordable Care Act] there’s a better way to do this,” Walker said.

McConnell said the personal highlight of the saga for him came when Sen. John McCainJohn Sidney McCainLawmakers worry about rise of fake video technology Democrats put Dreamers and their party in danger by playing hardball Trump set a good defense budget, but here is how to make it better MORE (R-Ariz.), who stopped ObamaCare repeal, voted to pass the Senate’s first tax bill earlier this month.

“I think particularly given the way the last ObamaCare effort failed, it was to me a high point leading up to final passage," McConnell said in an interview with The Hill.

The pressure to deliver on tax reform was also heightened by the collapse of ObamaCare repeal in September.

Desperate for a legislative win, Republican lawmakers were willing to make compromises on some elements to get legislation across the finish line. For example, the bill doesn’t repeal the estate tax, and the tax cuts for individuals generally expire after eight years in order to have the bill comply with the Senate’s budget rules.

Republicans made tax cuts a key part of their campaign platform, and they say they have now made good on that commitment.

“I think the decision by House Republicans to deliver on this promise and to stay at it until we did, that has driven this all the way across the line,” Brady said. 

Alexander Bolton contributed.