House Republicans introduced their tax legislation at the Ways and Means Committee Monday, beginning the trudge through a markup that is expected to last four days and will allow Democrats to unload their criticisms on the bill. “This is hell week,” Rep. Mike Kelly, R-Pa., said of the expected Democratic attacks.
The marathon legislative markup is also sure to feature substantive changes that Republicans have come up with since announcing the legislation last week.
Committee Chairman Kevin Brady, for instance, said on CNBC Monday morning that he intended to amend the bill to ensure that hedge funds cannot take advantage of “carried interest” income on short-term investments. That wrinkle of the tax code allows some investment managers to have their earnings taxed at lower capital gains rates rather than at the normal income tax, and President Trump has called for ending it, at least for hedge funds that quickly buy and sell stakes in companies.
Yet before making significant changes to the bill, Republicans had to work through opening debate in which they tried to defend the bill and Democrats took their best shots at it.
“We stand on the doorstep of delivering the most sweeping tax overhaul in more than 30 years,” Brady said in beginning the markup at noon.
Spectators had lined up hours beforehand for seats in the Ways and Means hearing room, which was air-conditioned to frigidity on the cool fall day. Ultimately, the hearing room was only filled to about half capacity.
Hours in, the only vote the audience witnessed was on an attempt by Rep. Lloyd Doggett, D-Texas, to try to delay the markup by a week to allow for a hearing on the bill, called the Tax Cuts and Jobs Act.
“This bill needs some vetting,” Doggett said. “In the president’s words, it needs extreme vetting.” His measure was voted down on party lines.
Following that vote, the committee heard a brief presentation on the bill from Thomas Barthold, the head of Congress’ Joint Committee on Taxation. The JCT is Congress’ in-house group of nonpartisan tax experts.
Democrats sought to use his expertise against Republicans. Michigan Rep. Sander Levin, for instance, got Barthold to note that, by 2023, 38 million taxpayers making between $20,000 and $40,000 would see tax increases under the GOP bill, the kind of middle-class tax increase that could imperil the bill’s political viability. Those tax increases come partly because the bill’s tax credit for new parents would phase out, which Republicans bet future congresses would reverse.
Other Democrats criticized the process rather than engage with Barthold.
“All this is is theater,” said Connecticut Rep. John Larson. After bashing different parts of the GOP bill, he told Barthold that “you’re merely a showpiece today.”
New Jersey Rep. Bill Pascrell, though, undertook the most forceful denunciation of the tax bill, citing the New Jersey Chamber of Commerce’s rejection of its elimination of deductions for state and local income and sales taxes. “This thing is shafting everybody,” Pascrell said. “It’s an equal opportunity shaft, I gotta admit that.”
Republicans, too, successfully engaged Barthold in highlighting flattering aspects of the bill. In questioning with Rep. Carlos Curbelo, R-Fla., Barthold noted that his group’s analysis is that the planned cut in the corporate tax rate from 35 percent to 20 percent would create a “clear incentive” for companies to invest in the U.S.
In fact, at the meeting’s opening, the top Democrat on the committee, Rep. Richard Neal of Massachusetts, bemoaned that Republicans had not sought to work with Democrats in lowering the corporate tax rate, noting that former President Barack Obama had sought a deal to do so.
“This could be negotiated,” he said, “and we’re missing that opportunity.”
