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 JohnsonSchumer to GOP: Cancel 'conspiracy hearings' on origins of Russia probe Comey, Rice, Clapper among GOP senator's targets for subpoenas amid Obama-era probe Schumer: GOP should 'stop sitting on their hands' on coronavirus bill 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 CollinsDemocrats gear up to hit GOP senators on DACA OVERNIGHT ENERGY: Trump administration gives renewables more time to take advantage of tax credits | House Republicans introduce bill to speed mining projects for critical minerals | Watchdog faults EPA communications in contamination of NC river The Hill's Coronavirus Report: Unemployment claims now at 41 million with 2.1 million more added to rolls; Topeka mayor says cities don't have enough tests for minorities and homeless communities 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 McCainHow Obama just endorsed Trump Former Texas Rep. Sam Johnson dies at 89 Trump's needless nastiness and cruelty will catch up with him MORE (Ariz.) and Lisa MurkowskiLisa Ann MurkowskiOVERNIGHT ENERGY: Trump administration gives renewables more time to take advantage of tax credits | House Republicans introduce bill to speed mining projects for critical minerals | Watchdog faults EPA communications in contamination of NC river Trump administration gives renewables more time to take advantage of tax credits GOP senators urge Trump not to restrict guest worker visas 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 WydenOn The Money: Senate Dems pump brakes on new stimulus checks | Trump officials sued over tax refunds | Fed to soon open small-business lending program Senate Democrats pump brakes on new stimulus checks Voting rights, public health officials roll out guidelines to protect voters from COVID-19 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 chairman criticizes Trump withdrawal from WHO Trump: US 'terminating' relationship with WHO Soured on Fox, Trump may be seeking new propaganda outlet MORE (R-Tenn.) and Patty MurrayPatricia (Patty) Lynn MurrayCOVID-19 workplace complaints surge; unions rip administration Lack of child care poses major hurdle as businesses reopen Democratic leaders say Trump testing strategy is 'to deny the truth' about lack of supplies 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 SchumerFederal judges should be allowed to be Federalist Society members Warren condemns 'horrific' Trump tweet on Minneapolis protests, other senators chime in VA hospitals mostly drop hydroxychloroquine as coronavirus treatment 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 RubioSchumer to GOP: Cancel 'conspiracy hearings' on origins of Russia probe Trump administration designates B of PPP funds for community lenders The Memo: Trump's Scarborough tweets unsettle his allies MORE (R-Fla.) and Mike LeeMichael (Mike) Shumway LeeHouse punts on FISA, votes to begin negotiations with Senate House cancels planned Thursday vote on FISA This week: Surveillance fight sets early test for House's proxy voting MORE (R-Utah) as Republicans seek a path to 51 votes.