Live coverage: Day two of the Ways and Means GOP tax bill markup

The House Ways and Means Committee is meeting for a second day on Tuesday to consider the Republican tax-reform bill. 

Day one of the markup was often contentious, with Democrats blasting the bill as a boon for the wealthy that would hurt the middle class. Republicans were united in their support for the measure, arguing that it would boost the economy, jobs and after-tax incomes.

On a party-line vote Monday, the panel passed an amendment from Ways and Means Committee Chairman Kevin BradyKevin Patrick BradyHouse GOP bill a mixed bag for retirement savers China imposes new tariffs on billion of US goods: report Trump announces tariffs on 0B in Chinese goods MORE (R-Texas) that included changes to the bill on the earned income tax credit, carried interest, international tax rules and university endowments. 

Amendments from Democrats dominated the day on Tuesday.

Second day ends with defeat of Dem amendments

7 p.m.

The House Ways and Means Committee voted to reject several amendments from Democrats along party lines.

The amendments that were defeated include those that would repeal the state and local tax deduction for businesses, restore the work opportunity tax credit, expand the child tax credit, restore the adoption tax credit, tax American companies' foreign and domestic profits at the same rate, and create a tax credit for employers with apprenticeship programs.

The amendment votes bring day two of the markup to a close. The markup will resume at 9 a.m. on Wednesday and is expected to go late into the night.

Committee recesses for House votes

6 p.m.

The House Ways and Means Committee is taking a recess for House votes.

Once House votes are complete, the markup will resume and lawmakers will vote on the amendments debated over the course of the afternoon.

Committee Chairman Kevin Brady said he expects the markup to end for the day following the votes on the amendments, and will resume the markup at 9 a.m. on Wednesday.

Sewell offers amendment on apprenticeship programs

5:50 p.m.

Rep. Terri SewellTerrycina (Terri) Andrea SewellDemocrats unite to expand Social Security Senate panel postpones election security bill markup over lack of GOP support Hillicon Valley: FBI fires Strzok after anti-Trump tweets | Trump signs defense bill with cyber war policy | Google under scrutiny over location data | Sinclair's troubles may just be beginning | Tech to ease health data access | Netflix CFO to step down MORE (D-Ala.) offered an amendment that creates a tax credit for companies that offer apprenticeship programs.

"My amendment is the type of bipartisan incentive that the tax code needs to lower the cost of training for employers and encourage the type of investment in human capital that is desperately needed in our workforce," she said.

Rep. Carlos CurbeloCarlos Luis CurbeloThe Hill's Morning Report — Sponsored by Better Medicare Alliance — Cuomo wins and Manafort plea deal Hillicon Valley: North Korean IT firm hit with sanctions | Zuckerberg says Facebook better prepared for midterms | Big win for privacy advocates in Europe | Bezos launches B fund to help children, homeless Bipartisan trio asks US intelligence to investigate ‘deepfakes’ MORE (R-Fla.) said he agrees that apprenticeship programs are important. However, he said he doesn't think a tax credit is the "most effective" way to encourage them.

He noted that the bill already allows people to use 529 plans to save for apprenticeship programs in addition to college, and added that the bill creates a tax system that encourages companies to come back to the U.S.

Doggett offers amendment on foreign profits

5:30 p.m.

Rep. Lloyd DoggettLloyd Alton DoggettTrump is wrong, Dems are fighting to save Medicare and Social Security Texas police arrest man for allegedly setting fire outside Dem lawmaker's office: reports Compulsory pharmaceutical licensing is little more than government theft MORE (D-Texas) offered an amendment that would tax foreign profits at the same rate as domestic ones, a critique of the Republican plan to create a territorial tax system.

“It’s just flat wrong that the corner pharmacy should have to pay a higher rate on its operations than [drugmaker] Pfizer pays,” Doggett said.

Rep. Sandy Levin (D-Mich.) said the current plan wasn’t up to snuff.

"The way you’ve put it together, there will still be a major impetus for companies to move overseas and have their profits overseas,” he said.

The Republican tax plan is meant to give U.S. companies operating abroad a more level playing field when competing with foreign companies. It moves the U.S. to a "territorial" tax system that exempts the dividends of corporations' foreign subsidiaries from U.S. tax.

Most peers to the U.S. have such a system, which the GOP says puts U.S. companies at a disadvantage and makes them susceptible to takeover.

“The additional tax burden faced by U.S. companies ... they become prime, rich companies for takeover from foreign companies,” said Rep. George HoldingGeorge Edward Bell HoldingGOP super PAC expands field program to 40 districts Brady at White House meeting: House to vote on more tax cuts in September Trump, GOP launch full-court press on compromise immigration measure MORE (R-.N.C).

Davis offers amendment to restore adoption credit

5 p.m.

Rep. Danny K. Davis (D-Ill.) offered an amendment that restores the adoption tax credit and makes other changes to the bill aimed at helping families.

"The adoption tax credit is a bipartisan credit that helps families offset some of the costs of adoption, especially for children with special needs," he said.

Davis's amendment would bring back the adoption tax credit and makes it refundable. The measure also brings back the exclusion for employer-related dependent care and the exclusion for employer-related adoption assistance programs. Additionally, it increases credit amounts for the child and dependent care credit and makes it refundable.

Some Republicans have also raised concerns about the bill's elimination of the adoption tax credit.

“This is not a Republican or Democrat issue. This is a red, white and blue issue,” said Rep. Mike KellyGeorge (Mike) Joseph KellyA numbers game: Employers need 'Cadillac Tax' relief On The Money: Commerce to review uranium imports | Lawmakers urge Trump not to impose auto tariffs | White House wants steeper cuts to EPA funding | Google hit with massive B fine Auto industry groups, lawmakers urge Trump administration to avoid tariffs on auto imports MORE (R-Pa.).

House Ways and Means Committee Chairman Kevin Brady (R-Texas), himself the father of two adopted children, said he was planning to reject Davis's amendment but wants to work "to find a way forward in a positive way in this area.”

Brady said he's concerned that the current adoption tax credit "leaves too many Americans behind."

Sánchez offers amendment to increase Child Tax Credit

4:25 p.m.

Rep. Linda Sánchez (D-Calif.) offered an amendment to significantly increase and alter the Child Tax Credit.

Sánchez said the Republican plan was woefully inadequate when it comes to the child credit.

“Instead of improving the credit and putting it within reach of working families, Republicans would do the opposite under their proposal,” she said. The plan, she said, includes family flexibility credits that expire after five years, imposes a threshold on accessibility and stops immigrant families with U.S. citizen children from claiming the credit.

Her amendment would expand the credit to $3,600 for young children, scrap the $3,000 income threshold on the part of the credit that is refundable and stop the $300 expiring credit from running out.

Rep. Adrian Smith (R-Neb.) said that Sánchez needed to consider the bill in its entirety. 

“I think it’s important to know what the underlying bill does do, and the underlying bill increases the child credit 60 percent,” he said. The bill increases the credit from $1,000 to $1,600, though that includes the $300 that expires after five years.

Smith also noted that it already expanded refundability. Other cuts, such as doubling the standard deduction, he argued, would help families.

Reed blasts Dems for playing 'politics'

4:05 p.m.

Rep. Tom Reed (R-N.Y.) blasted Democrats for playing political games by offering amendments designed to put Republicans on the spot.

"I know what's going on here, ladies and gentlemen, they're going to want to put me on the record to vote against something that I have supported," he said. "It's the politics of Washington, D.C."

Reed asked Rep. Ron KindRonald (Ron) James KindAllow HSA dollars to be used for over-the-counter drugs Repeal of medical device tax would support medical technology innovation On The Money: Commerce to review uranium imports | Lawmakers urge Trump not to impose auto tariffs | White House wants steeper cuts to EPA funding | Google hit with massive B fine MORE (D-Wis.) if he would commit to voting for the tax bill on the House floor if the Democrat's amendment to preserve the work opportunity tax credit is included. Kind replied by noting that his amendment is paid for but the overall bill still increases the deficit.

"That was not a yes or no answer," Reed said. "That is politics."

Reed said he supports the work opportunity tax credit but will vote against the amendment to move the ball forward on tax reform. He said he'd make sure the work opportunity tax credit is continued after the tax bill is passed.

“I’m not going to engage in this political theater any longer,” Reed said.

Kind offers amendment to restore work opportunity tax credit

3:40 p.m.

Rep. Ron Kind (D-Wis.) offered an amendment to permanently extend the work opportunity tax credit, which the proposed bill would eliminate. 

Kind said the credit is important because it creates incentives for hiring and has particularly been beneficial to veterans.

"We think it's a common-sense amendment," he said.

But Rep. Adrian Smith (R-Neb.) said he's not convinced that the work opportunity tax credit has been effective and argued that the GOP tax bill “is more effective than the continuation of the status quo."

“We need to do better. We can do better,” he said.

Kind's amendment would increase the corporate tax rate to offset the revenue loss created by restoring the work opportunity tax credit.  

 

House measure could run afoul of the Senate Byrd rule: report

3 p.m.

As the House debate continued, a new analysis suggested the bill would not satisfy stringent Senate rules for avoiding a filibuster.

Republicans plan on using budget reconciliation, which only requires a simple majority, to pass their tax plan in the Senate. But if portions of the legislation don't adhere to the “Byrd Rule,” named after late Sen. Robert Byrd, they can be subjected to the regular 60-vote threshold, which would allow Democrats to tank the bill.

“We estimate the legislation would add about $155 billion to the deficit in 2028; the Byrd rule does not allow reconciliation legislation to add to the deficit at all beyond the budget window (which currently ends in 2027),” the Committee for a Responsible Federal Budget wrote in a review of the legislation.

Changing that could require Republicans to make corporate tax cuts temporary, which the group said could undermine the economic growth they hope to stimulate with the reform.

Kind offers amendment to scrap SALT deduction for corporations, pass-through businesses

2:30 p.m.

Rep. Ron Kind (D-Wis.) offered an amendment to scrap state and local tax (SALT) deductions for corporations and pass-through businesses

“It makes more sense to the working families that are being asked to give up a very important provision that they currently enjoy,” said Kind, echoing a Democratic talking point that the tax bill scraps the deductions for individuals, but keeps them in place for businesses.

“Let’s also ask the corporations of America to also give up the deductions,” he said. 

 

Rep. Devin Nunes (R-Calif.) spoke against the amendment, saying it would distort the market and create an unlevel playing field for businesses.

“If you begin to mess with that, you’d create massive distortions in the marketplace,” Nunes said.

Rep. Sandy Levin (D-Mich.) tweeted about the issue. Levin asked why the tax plan allows corporations to deduct SALT, but repeals the individual deduction.

 

Two Democratic amendments rejected

2:15 p.m.

The Ways and Means Committee rejected both of the Democratic amendments offered earlier in the day on party-line votes.

The amendment from Rep. Earl BlumenauerEarl BlumenauerOvernight Defense: Mattis dismisses talk he may be leaving | Polish president floats 'Fort Trump' | Dem bill would ban low-yield nukes Dems introduce bill to ban low-yield nukes Congress just failed our nation’s veterans when it comes to medical marijuana MORE (D-Ore.) to sunset the bill after two years if it increases the deficit and the amendment from Rep. Bill Pascrell (D-N.J.) to restore the full state and local tax deduction in the bill, both failed by votes of 16-23.

Notably, the only New York Republican on the committee, Rep. Tom Reed, voted against the state and local taxes amendment.

Other Republicans from New York have said they don't support the bill because of the bill's treatment of the SALT deduction. But Reed has been supportive of the compromise to repeal the deduction for state and local income and sales taxes but allow property taxes up to $10,000 to be deducted.

Several Democrats were enthusiastic about their votes. Rep. Joseph Crowley (D-N.Y.) said he voted "absolutely" on Blumenauer's amendment, while Rep. Linda Sánchez (D-Calif.) said she voted "hell yes."

Budget chief: Trump won't sign GOP tax plan if middle class will pay more

1:40 p.m.

White House budget chief Mick MulvaneyJohn (Mick) Michael MulvaneyPoll: Cruz up 9 in Texas Senate race Financial policymakers must be suffering from amnesia On The Money: Broad coalition unites against Trump tariffs | Senate confirms new IRS chief | Median household income rose for third straight year in 2017 | Jamie Dimon's brief battle with Trump MORE said Tuesday that President Trump won't sign a tax plan passed by the GOP-held House and Senate if the proposed bill would raise taxes on the middle class.

In an interview with Fox Business Network's "Cavuto," Mulvaney said that the White House will make the determination based on their own numbers, which he didn't specify.

“If our numbers show” that “taxes are going up in the middle class, we’re not going to sign," Mulvaney told host Neil Cavuto.

Committee completes debate on Pascrell amendment

1:35 p.m.

The Ways and Means Committee completed debate on Rep. Bill Pascrell's (D-N.J.) amendment to restore the state and local tax deduction and recessed for votes on the House floor.

Roll-call votes on amendments are expected at a later point.

New analysis: Majority would benefit from GOP tax plan, but some would see hikes

1:25 p.m. 

A new analysis from the Joint Committee on Taxation found that some 61 percent would see their tax bill fall in the first year of the Republican tax plan, while 8.3 percent would see a hike.

Almost a third of taxpayers would not see a change of more than $100 in their favor or against them.

According to the analysis, which was requested by Rep. Richard Neal (Mass.), the ranking Democrat on the Ways and Means Committee, those differences would change over time.

By 2027, Only 46.2 percent of taxpayers would have a lower tax bill, and 19.5 percent would see their bills go up.

A significant portion of the middle class would see their taxes rise over time. 

By 2027, for example, 22.5 percent of those making $40,000 to $50,000 per year would see taxes go up by over $100, as would 23.7 percent of those making $50,000 to $75,000 and 25.9 percent of those earning between $75,000 and $100,000.

The wealthy would see the greatest changes from the tax plan. In 2027, 57 percent of those earning over $1 million would have lower taxes, and 42.4 percent would have higher taxes. 

Whether a household with income above $1 million would see their tax bill rise or fall would depend on a number of factors, including the household’s use of various deductibles that would be eliminated or curbed by the GOP plan.

Reed: Fellow N.Y. Republicans with SALT concerns didn't see the whole picture

1 p.m.

Rep. Tom Reed (R-N.Y.) said fellow New York Republicans who voted against the budget based on concerns over state and local taxes simply hadn't seen the big picture.

 

“Those folks were not opposed to this legislation, they just didn’t have all the pieces of the puzzle,” he said “I”m confident that some of my colleagues, when they look at the big picture, the whole tax reform, will change their position."

Republicans from high tax states such as New York and New Jersey have raised serious concerns about a provision in the tax plan that would scrap a deduction for state and local taxes. Several voted against the budget, which set the stage for the tax bill, in protest.

Five New York Republicans said that the current form of the bill still did not satisfy their concerns, though others have come around.

It has remained one of the thorniest issues for House Republicans on the tax bill. Democrats argue that scrapping the deduction is a double tax, and raises the burden for states that already are net donors to the federal government.

"I tell you, Mr. Reed, your district's screwed under this proposal," said Rep. Joe CrowleyJoseph (Joe) CrowleyFor Capuano in Massachusetts, demography was destiny Carper fends off progressive challenger in Delaware primary Election Countdown: Fallout from Massachusetts stunner | In Delaware, Carper looks to avoid next progressive upset | Dem 2020 primary already in full swing | How a Dem ex-governor hopes to take red-state Tennessee | GOP challengers hit Dems over tax votes MORE (D-N.Y.)

Dem offers amendment to bring back full state and local deduction

12:20 p.m.

Rep. Bill Pascrell (D-N.J.) offered an amendment to restore the full state and local tax (SALT) deduction.

“An erosion of SALT is a tax increase: plain and simple,” Pascrell said.

 

The bill currently would repeal the deduction for state and local income and sales taxes and would cap the deduction for property taxes at $10,000.

Including a limited property tax deduction was a compromise House GOP leaders added to the bill to help win over Republican lawmakers from high-tax states such as New York and New Jersey. But Pascrell disputed that this is a win for lawmakers in blue states, saying it's a "raw deal."

Pascrell also blasted Treasury Secretary Steven MnuchinSteven Terner MnuchinTrump announces tariffs on 0B in Chinese goods Trump: China tariff announcement to come Monday afternoon Trump could hit China with tariffs of 0 billion as soon as Monday MORE for saying in the past that the SALT deduction should be repealed in order to stop subsidizing states.

"I have never heard anything as stupid from any Treasury secretary in my life," he said. That comment led Rep. Peter Roskam (R-Ill.), who was presiding over the hearing at the time, to warn Pascrell not to cross lines.

Other Democrats on the House Ways and Means Committee expressed support for Pascrell's amendment.

But Republicans argued that the bill currently helps the middle class and eliminates deductions to help boost the economy.

"In my opinion, we've done a masterful job here of focusing on ways that we can raise revenue, like doing away with the state and local tax deduction and applying that revenue to things that will invigorate our economy," said Rep. Tom Rice (R-S.C.).

Under the amendment, the corporate tax rate would be increased in order to offset bringing back the full SALT deduction.

The committee will vote on the amendments in batches.

Crowley notes lawmakers' donor comments

11:40 a.m.

Rep. Joseph Crowley (D-N.Y.) said that Republican donors are watching GOP lawmakers on taxes, bringing up comments Rep. Chris CollinsChristopher (Chris) Carl CollinsIndicted GOP lawmaker to stay on ballot in New York this fall: report Live coverage: Cuomo, Nixon face off in high-stakes New York primary Hoyer lays out government reform blueprint MORE (R-N.Y.) made earlier in the day.

"You know who is watching — your donors are watching," Crowley, the chairman of the House Democratic Caucus, said.

Collins told reporters earlier on Tuesday that his "donors are basically saying ‘Get it done or don’t ever call me again.’ ”

Crowley said that he didn't want to blanket all Republicans with Collins's comments, but pointed out that Republicans face political pressure on taxes.

"We know who you're all catering to today," he said. "We also know that it's been rumored that if you don't get this done, well you might as well give up the majority."

"That's kind of sad that that's how we're going to be putting together a tax bill that affects so many people," he added.

Crowley also compared the tax bill to a "clunker" of a car. He called Rep. Earl Blumenauer's (D-Ore.) amendment to sunset the bill if it increases the deficit after two years a "legislative lemon law."

Parties spar over deficits

11:30 a.m.

Democrats and Republicans sparred over the tax bill’s deficit effects, with Republicans arguing that spending is the main driver of debts and Democrats arguing that the plan would send a giant bill to the next generation.

“The driver of our debt is our spending,” said Rep. Jim Renacci (R-Ohio). “We have an opportunity to tell the American people 'Look, we understand we’re spending too much money, we’re going to give you a little bit back because you’re struggling.’ ”

Democrats such as Rep. Ron Kind (D-Wis.) challenged Republicans to offer spending cuts if that was their preferred solution.

“What works is pay-as-you-go budget rules,” he said. “If you’re offering a tax cut or a spending increase, you have to find an offset.”

Rep. Bill Pascrell (D-N.J.) said that the Bush tax cuts of 2001 and 2003 were largely responsible for the major deficits of recent years. He brought out a colorful chart to make his point.

Rep. Carlos Curbelo (R-Fla.) agreed that deficits were problematic and said that he preferred a deficit-neutral bill.

“No one member of Congress gets everything they want,” he said. “We did have to make some sacrifices.”

The bill allows for roughly $1.5 trillion to be added to the deficit over a decade, though Democrats have cited a larger figure of $2.3 trillion, which they say takes greater interest into account.

Dem offers sunset amendment

10:40 a.m.

Rep. Earl Blumenauer (D-Ore.) offered the first amendment of the day, which would have the bill sunset after two years if it creates larger deficits.

Blumenauer described the amendment as a "failsafe mechanism." If the bill doesn't work to create an economic boom, “we ought to put the breaks on it,” he said.

The Oregon Democrat had laid out his intention to offer this amendment on Monday in an op-ed in The Hill.

The amendment was cheered by other Democrats on the committee but was blasted by Republicans on the panel.

“This isn’t a failsafe enterprise, this is a poison pill,” said Rep. Peter Roskam (R-Ill.). He said that Republicans aren't assuming that all of the economic growth will occur immediately and that the bill would benefit those in all income groups.

Club for Growth criticizes tax plan

10:25 a.m.

The influential conservative nonprofit Club for Growth on Tuesday criticized the House GOP tax plan, calling out four aspects of the plan they say don’t do enough to boost the economy.

The group said provisions in the bill that would reduce benefits for the wealthiest taxpayers “fail the pro-growth test” and don’t follow Republican campaign promises.

“While the corporate tax cut will lead to some increase in our nation’s GDP, the rest of the provisions on individual taxpayers fails the pro-growth test,” Club for Growth President David McIntosh said.

“Republicans must correct at least four serious shortcomings of the House bill to follow through on campaign promises and to bring our nation closer to a tax reform proposal that is truly pro-growth."

High interest for day two

9:55 a.m.

Interest remained high on the second day of the markup. 

A line formed outside of the House Ways and Means Committee room in the Longworth House Office Building. However, some seats in the room were still empty as the markup was starting.

Many of the people in the room at the start of the markup were high-school students from North Carolina. 

Rep. John Larson John Barry LarsonRyan, lawmakers call on Catholic Church leaders to come clean More than 150 Dems launch caucus to expand Social Security benefits Democrats unite to expand Social Security MORE (D-Conn.), a former teacher, chatted with the group of students as they made their way into the room.

Brady: Adoption credit could be added back into bill

8:30 a.m.

The adoption tax credit may still be added back into the GOP tax bill, the House’s top tax writer said Tuesday morning.

“We’re having, absolutely we’re having these discussions,” House Ways and Means Committee Chairman Kevin Brady (R-Texas) said during an interview with conservative radio host Hugh Hewitt. “For me as a pro-life dad and my wife as a pro-life mom, we understand.”

The credit is a one-time tax refund available for parents who adopt from foster care, internationally or through private domestic adoptions. It can be applied over the course of five years. For 2017, the federal adoption tax credit was $13,570.

Nathaniel Weixel and Sylvan Lane contributed