• Lawmakers are now mulling options that would result in a tax increase down the road, including a possible increase in the corporate tax rate and the revival of the alternative minimum tax on wealthy individuals and some companies.
Republicans close in on passing Senate bill.
The Senate has once again regained momentum to pass Republicans’ sweeping tax overhaul, after party leaders picked up the votes of three holdouts, Mr. Flake, Mr. Daines and Mr. Johnson.
Senator John Cornyn of Texas, the No. 2 Senate Republican, said on Friday morning that Republicans had the 50 votes they need to pass the tax bill. Mr. Cornyn said Senator Bob Corker of Tennessee was not yet on board, and he indicated that Senator Jeff Flake of Arizona was also a holdout.
He said of Mr. Corker, “We haven’t given up, but right now we don’t have him.”
Republicans appeared increasingly confident as they milled into the Senate’s ornate Strom Thurmond room to hash out the remaining details of a tax bill that has been a moving target.
In spite of their optimism, uncertainty remained. Senator Susan Collins, surrounded by a horde of journalists wielding voice recorders, declared “I don’t know how Senator Cornyn can speak for me, I speak for myself,” when told that Senator John Cornyn, the Republican majority whip, said he had her vote.
Another wild card is Senator Marco Rubio of Florida, who has pushed hard, along with Senator Mike Lee of Utah, for an amendment that would allow more low-income families to claim an expanded child tax credit. To fund that change, Mr. Rubio and Mr. Lee would reduce the size of the cut in the corporate tax rate, landing it at 22 percent instead of 20 percent, a change opposed by President Trump.
Fifty votes would be enough for a victory if Vice President Mike Pence breaks the tie, even if Mr. Corker and Mr. Flake, two deficit hawks in the party, remain opposed to the bill.
Mr. Corker and Mr. Flake have pushed to scale back the tax cuts in the Senate bill by as much as one-third, in the wake of a report from the congressional Joint Committee on Taxation that projected the bill would add $1 trillion to deficits over the course of a decade, even after accounting for economic growth. Their insistence has angered many Republican colleagues who do not want to reduce the $1.4 trillion tax cut package.
On Thursday night, Republicans were discussing several possibilities for changing the bill to address their concerns, including gradually raising the corporate tax rate in later years in order to save as much as $500 billion.
Mr. Trump sounded optimistic on Friday morning, in a tweet taunting Democrats over the bill’s prospects.
Senate leaders still need 50 votes for passage.
Republican leaders ended Thursday with the same problem they started with: They still need to secure 50 votes to be able to pass their tax bill.
Their effort appeared to be gaining momentum on Thursday, with talk of a final vote later that night or early Friday.
But by the end of the day, they were contending with twin setbacks, both involving how the bill would affect federal budget deficits.
The congressional Joint Committee on Taxation said in an analysis released on Thursday afternoon that the legislation would add $1 trillion to federal budget deficits over a decade, even after accounting for economic growth.
In addition, a provision meant to prevent ballooning deficits ran into parliamentary problems. The provision would have increased taxes if economic growth fell short of expectations, but it was deemed by the Senate parliamentarian to run afoul of budget rules that must be followed if the bill is to be shielded from a Democratic filibuster.
Without the so-called trigger, the votes of a handful of Republicans, including Senator Bob Corker of Tennessee, appeared at risk.
“We need to get on board Senator Flake and Senator Corker,” Senator John Cornyn of Texas said on Friday.
To pass the tax bill in the Senate, Republican leaders can lose only two of their members, assuming Democrats are unified against the measure.
Friday could be a long day.
The Senate will convene on Friday morning and the debate on taxes will continue. At some point, the Senate will undertake a marathon of amendment votes known as a vote-a-rama. Eventually, there would be a final vote on the legislation.
But in the meantime, Republicans need to decide how they want to change their bill. To satisfy Mr. Corker, for example, Republicans were discussing putting in place tax increases that would take effect some years from now, a step that would soften the deficit effects of the legislation.
Will they decide to raise taxes?
The options under discussion to satisfy the deficit hawks could essentially result in a tax increase down the road. Lawmakers have talked about raising the corporate tax rate above 20 percent after a period of years. There’s also discussion about reviving the alternative minimum tax, or A.M.T., on high-net individuals and some companies.
Both of those ideas are unlikely to sit well with some Republicans, including those in the House, who could be criticized for essentially voting to increase taxes.
Lawmakers may decide that’s a risk worth taking or they could ultimately decide to jettison the deficit hawks’ concerns and lose their votes.
Party leaders gained three more votes early Friday.
Mr. Daines and Mr. Johnson had objected to the bill because of how it treated pass-through businesses, whose profits are distributed to owners and taxed at individual rates.
The Senate tax bill allows pass-through owners to deduct 17.4 percent of their business income as a way of lowering their taxes. Republicans were planning to increase the deduction to 20 percent to address the concerns over how pass-through owners were being treated by the bill.
Now, the deduction is to be raised to 23 percent, a spokeswoman for Mr. Daines said.
“After weeks of fighting for Main Street businesses including Montana’s farmers and ranchers, I’ve decided to support the Senate tax cut bill, which provides significant tax relief for Main Street businesses,” Mr. Daines said in a statement on Friday morning.
Mr. Johnson now supports the Senate bill as well, a spokesman said on Friday morning.
Mr. Flake, in a statement, said he would support the bill after gaining assurances it would not use budget gimmicks and that lawmakers would work with him on a legislative solution on Deferred Action for Childhood Arrivals.
More deficit troubles emerged.
The independent Tax Policy Center said on Friday that the Senate tax bill would add $1.2 trillion to federal deficits over 10 years, even after accounting for increased economic growth. That deficit estimate was slightly higher than the congressional Joint Committee on Taxation projected on Thursday.
The so-called dynamic score from the center found that the bill, as approved in the Finance Committee, would increase economic growth by 0.7 percent next year, but that its growth boost would fade over a decade, as deficits and federal debt increase. The center said those benefits would be larger if the economy was struggling, and not operating under low unemployment: “Because the economy is currently near full employment, the impact of increased demand on output would be smaller and diminish more quickly than it would if the economy were in recession.”
Republican senators have criticized the center’s previous findings and largely dismissed the Joint Committee’s analysis on Thursday. They say they expect much larger growth effects than the analyses have found.
The independent Tax Foundation, which typically finds higher growth effects from tax cuts, has not yet released an analysis of the bill after it underwent significant amendments in committee.
Several senators are worth watching.
As Republicans mull changes to their tax plan, the spotlight will focus on several senators with varying concerns.
Republican leaders do not need to win over all of these lawmakers. In fact, they could decide that some demands are simply not worth meeting — assuming they can satisfy other Republicans and therefore get the 50 votes they need. Vice President Mike Pence can also provide a tiebreaking vote.
At least a handful of senators have expressed concerns about the deficit, including Mr. Corker and Senators Jeff Flake of Arizona and James Lankford of Oklahoma. Now that the trigger is dead, Republicans may need to come up with another idea to protect against piling up debt as a result of the tax overhaul.
Then there is Ms. Collins, a moderate Republican who has her own concerns about the tax overhaul. She wants the bill to allow individuals to deduct up to $10,000 in property taxes, and adding that provision could help win her over.