The Senate Budget Committee approved the GOP tax bill after a meeting with Trump and now it moves to the Senate floor. (Photo: AP)

(Bloomberg) — President Trump met with Republican senators in a question-and-answer session that ended just minutes before the Senate Budget Committee approved the bill on a party-line vote of 12 to 11.

The vote sends the measure on to the Senate floor for a vote as early as Thursday.

Tuesday’s committee vote came after Republican leaders addressed objections raised by GOP members who threatened to block it.

The House passed its own tax-cut measure last month, and Senate Republicans can afford to lose no more than two votes among their ranks to pass the measure without Democratic help.

The bill would cut the corporate tax rate to 20 percent from 35 percent in 2019 and reduce individual rates and double the standard deduction until 2026 — adding $1.4 trillion to the federal deficit over a decade.

The legislation also would open the Arctic National Wildlife Reserve to oil drilling.

Just one GOP senator on the panel would have had the power to block the bill given the majority’s one-vote margin in committee.  

GOP committee member,  Bob Corker of Tennessee, said he reached an an agreement with Senate tax writers on a broad outline for a revenue trigger provision that he and other GOP senators are seeking. He has sought a “backstop” that would create automatic tax increases if the tax bill doesn’t spur strong economic growth as Republicans have promised.

Pass-through businesses

 

Senator Ron Johnson, a Wisconsin Republican, pushed to change the way pass-through businesses would be treated by increasing a proposed 17.4 percent deduction for pass-through business income to at least 20 percent. Johnson would pay for the heftier tax break by eliminating the corporate deduction for state and local taxes.

Johnson said he voted to approve the measure “based on the progress” in recent days. “I’m getting commitments we are going to get this fixed,” he said.

Under the budget process Republicans are using to pass the tax bill without Democratic votes, the Budget Committee was tasked with combining the Finance Committee’s tax measure with the Alaska drilling proposal from the Energy and Natural Resources Committee.

The legislation faces an open amendment process on the Senate floor that may spell substantial changes before a final vote that’s expected Thursday. 

Republican Senator Susan Collins of Maine has said she backs two provisions in the House bill — retaining an individual income tax deduction for state and local property taxes, capped at $10,000 a year, and keeping the existing top individual tax rate of 39.6 percent for those making $1 million or more. The Senate plan would cut the top rate to 38.5 percent.

Collins may also insist on eliminating the bill’s repeal of the Obamacare mandate that most individuals get insurance or pay a penalty.

Marijuana businesses

 

Senator Cory Gardner, a Colorado Republican, said he plans an amendment to make marijuana businesses eligible for tax breaks.

If the bill passes the Senate, Republicans plan to convene a conference committee next week to reconcile the House and Senate versions.

While the overall architecture of the two bills is similar, there are significant differences.

The House would repeal the individual deduction for medical expenses and limit the home mortgage-interest deduction to future loans under $500,000 — provisions that aren’t in the Senate bill.

The House would keep individuals’ state and local property tax deduction, which the Senate bill would eliminate.

For pass-through businesses, the House proposes a 25 percent top rate and a complex formula for separating individual and business income.

The Senate would allow pass-through owners to take a 17.4 percent deduction on their pass-through income, which would then be taxed at individual tax rates that top out at 38.5 percent.

The Senate bill would keep seven individual tax brackets, similar to current law, while the House bill would have four brackets. Most individual tax breaks provided in the Senate bill would expire to avoid creating a long-term deficit increase, while corporate reductions would be permanent.

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