Three contentious issues with the House tax plan
Three problems to watch as the House Ways and Means Committee finalizes the Republican tax reform bill this week:
- The new fault line for big business: an excise tax on cross-border transactions. Watch for multinational corporations and well-funded lobby groups to mobilize aggressively against this tax. It caught everyone by surprise. Our thought bubble: If the excise tax becomes too big a problem, we bet they replace it with the repeal of the Obamacare individual mandate. (But bringing health care into a tax debate has its own problems.)
- Pro-life groups and social conservative leaders are fighting to save the adoption tax credit, which the GOP bill scraps. Influential social conservative leaders such as Penny Nance and Marjorie Dannenfelser are leading the charge. Nance, who runs Concerned Women for America, emailed me to say that "the majority of families who sacrificially walk out their faith by caring for 'the least of these' through adoption depend on the ability to afford the costs...I am almost speechless at the lapse of judgement but we will work to clean up the mistake."
- A number of Republicans believe it's political malpractice to eliminate a longstanding tax break for people who have very high medical costs. One senior House Republican told me he thinks it's the stupidest idea in the entire 429-page tax bill.
Be smart: Tax reform is a series of painful trade-offs. Every time you shut down a tax break you find an interest group passionate about defending it. But not all tax breaks are politically — or morally — equal.
What's next? Republicans will propose plenty of changes to the tax bill over the coming days, with House Ways and Means aiming to finish its mark-up by the end of the week. I've seen no signs so far, however, that they're prepared to fold on any of these controversial provisions.
- When I asked a senior House GOP official about the adoption tax credit, for example, they pointed me to all the other social conservative measures contained in the bill.
- And House Ways and Means chairman, Kevin Brady, who is an adoptive father, answers the question this way: "We are working to give families not only help when they're adopting but every year when that child is growing up, by making sure they have more in their paychecks to raise kids."
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