Risks ahead for U.S. tax push as disputes linger, Trump returns

[November 14, 2017]  By Amanda Becker and Doina Chiacu

WASHINGTON (Reuters) - Congressional Republicans pushed ahead on Monday on a U.S. tax code overhaul as a Senate panel considered the issue, but risks lay ahead with major intraparty disputes unsettled and President Donald Trump returning soon from Asia as the debate heats up.

While overseas at a leaders conference, Trump tweeted some tax bill suggestions early on Monday that were starkly different from the two Republican plans being considered in the U.S. Senate and House of Representatives.

He called on lawmakers to add a highly risky provision to their tax effort: repealing the individual mandate included in the 2010 Obamacare health insurance law that requires Americans to have health coverage or pay a tax to Washington.

Neither of the two Republican plans includes such a politically divisive measure. Efforts by Republicans to dismantle Obamacare, formally known as the Affordable Care Act, collapsed dramatically months ago.

Trump has pushed hard for adding the mandate repeal to the tax-cut package. He tweeted the same suggestion on Nov. 3 just before he departed for his multi-nation Asian tour.

In his latest tweet, he also urged slashing the top tax rate for high earners to 35 percent from 39.6 percent, despite criticism from Democrats that the Republican tax bills are deficit-expanding giveaways to the rich and corporations.

The House retains the existing top tax rate in its bill, while the Senate proposes cutting it slightly to 38.5 percent.

Trump is set to return to Washington on Tuesday. A White House aide confirmed that the president would speak to House Republicans on Thursday ahead of their expected tax bill vote.

"I am proud of the Rep. House & Senate for working so hard on cutting taxes {& reform.} We’re getting close!" Trump wrote in his Monday Twitter post.

"Now, how about ending the unfair & highly unpopular Indiv Mandate in OCare & reducing taxes even further? Cut top rate to 35% w/all of the rest going to middle income cuts?" he added.

CLOCK IS TICKING

Since taking office in January, Trump has not scored a major legislative accomplishment, while frequently shifting positions and confusing lawmakers on Capitol Hill on various issues.

Many Republicans view a win on overhauling the tax code as crucial to avoiding having to go to the voters in 2018's congressional elections with no achievements to show for a year in control of the White House and both chambers of Congress.

The clock is ticking for them. The House is expected to vote soon, perhaps on Thursday, on a tax bill approved last week at the committee level. House tax committee Chairman Kevin Brady said he was confident Republicans had the votes for passage.

The Internal Revenue Code books are delivered to a Senate Finance Committee markup on the "Tax Cuts and Jobs Act" on Capitol Hill this month. REUTERS/Kevin Lamarque

Brady told reporters in a Capitol hallway that including a repeal of the Obamacare individual healthcare mandate in the tax bill "remains under consideration."

The Senate tax committee will debate its tax plan all week before heading home for the U.S. Thanksgiving Day holiday.

When both chambers return near the end of November, they will have only 12 legislative days before the end of 2017.

In that time span, Republicans hope to iron out differences between the two tax plans over the deduction for state and local taxes, the timing of a corporate tax rate cut and the future of the estate tax on inheritances.

Each of the Republican tax plans would add about $1.5 trillion to the federal deficit over the next decade, another issue causing dissension among Republicans.

Senate Republican leader Mitch McConnell said he hoped to have a tax bill ready in the week after Thanksgiving. Between now and then, an army of lobbyists will be pressuring lawmakers to protect favored special-interest tax breaks.

On Dec. 8, a three-month extension of the spending authority for the federal government expires, requiring congressional action that could divert lawmakers from the tax overhaul.

A lengthy amendment introduced on Monday to the Senate tax plan by Republican Orrin Hatch, chairman of the tax panel, would remove a provision that lets working Americans over 50 make tax-free catch-up contributions to their retirement plans.

Democrats have kept up steady criticism of the Republican tax bills and how they were drafted. Democratic leader Chuck Schumer said the Senate measure was developed in secret by a small group that held no public hearings and ignored Democrats.

"And the reason for such reckless haste is all too obvious: the product is a wretched one ... it is focused on the wealthy to the exclusion of the middle class," he said in a statement.

(Additional reporting by Susan Cornwell; Editing by Kevin Drawbaugh and Peter Cooney)

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