Democrats probably won't provide votes for tax reform, a top Republican lawmaker said Wednesday, meaning that partisan legislation advanced through special procedures in the Senate is "ever more likely."
Speaking at the U.S. Chamber of Commerce, Senate Finance Chairman Orrin Hatch said it looks increasingly likely that Senate Republicans will be forced to pass tax legislation using the procedural tool known as reconciliation. The tool allows bills to pass with only a simple majority, rather than the usual 60 votes required to overcome a filibuster.
With only 52 votes in the upper chamber, the Utahn noted, Republicans have little margin for error.
As a result, he suggested it will be difficult to include provisions that have the potential to divide Republicans. One such measure he referenced, without weighing in on it directly, is the House Republican proposal to border-adjust corporate taxes.
A few senators are already concerned about that plan, which has alarmed retailers and refiners who would lose the ability to deduct imports from their taxable income.
"I'm not trying to pour cold water on everyone's tax reform enthusiasm," Hatch said.
"I'm simply saying that a major concern on tax reform is producing a bill that can get through the Senate," he later added, explaining that the Senate couldn't simply take up a House bill.
That means more uncertainty about the controversial House Republican border adjustment.
House Republicans have proposed taxing imports as part of a broader corporate rate-cutting reform that would tax goods based on where they are sold. In the plan, companies would no longer be allowed to deduct the cost of imported goods and services, but would no longer pay any taxes on revenues from exports. In today's system, U.S. companies are taxed on all profits, whether they are earned in the U.S. or abroad. Republicans say that the change would encourage more manufacturing within the U.S., and discourage companies from moving production overseas.
Hatch said it is too early to form a definitive opinion on the measure. More information would be needed, he said, about who would bear the tax, whether it would be consistent with U.S. trade agreements, and what rules would be needed to transition to it.
Every day, he said, he gets asked about border adjustment, often by reporters seeking to portray him as in conflict with House Republicans.