- The new Republican tax law sets up major changes to the US tax code.
- Republicans are already acknowledging they will need follow-up bills to help correct any implementation issues.
- Democrats may not go along with any attempts at fixing the law, given that Republicans blocked fixes to the Affordable Care Act under President Barack Obama.
The Republican tax bill officially became the law of the land on Monday, when most of its changes to the tax code went into effect.
Though most Americans won’t notice major changes until they file their 2018 taxes next year, some of the bill’s effects will become clear in shorter order.
And as with any other law that significantly tweaks an existing system, this one is likely to require a series of technical fixes for any hiccups that pop up along the way.
“I can’t imagine any major undertaking like this that doesn’t require technical corrections in the future,” GOP Rep. Kevin Brady, the chair of the House Ways and Means Committee who helped write the House version of the tax bill, told reporters last month.
But those fixes could be more difficult than Republicans expect. They will need cooperation from Democrats, who faced opposition when they wanted adjustments to the Affordable Care Act, the healthcare law better known as Obamacare.
And this fraught political environment could complicate the tax law’s implementation and future.
The law’s breakneck speed could have unintended consequences
The preservation of the corporate alternative minimum tax – a parallel tax structure designed to ensure companies don’t take too many deductions – in the Senate’s version of the bill led to an uproar from many businesses that said it could effectively eliminate beneficial tax credits, such as one for research and development.
The corporate AMT was ultimately scrapped in the final bill, which also included corrections for several other errors in the House and Senate versions.
Given that the release of the final bill and its passage happened within a week, more problems are bound to pop up.
This isn’t necessarily uncommon. The ACA also needed a series of technical corrections after issues cropped up during its implementation. Even the 1986 tax law enacted under President Ronald Reagan that GOP leaders have lauded as a gold standard required follow-up legislation.
Democrats could block a corrections bill
Since any bill proposing corrections would go through a regular vote, it would need the support of at least nine Democrats to avoid a filibuster in the Senate.
Republicans have previously blocked several Democrats’ proposed fixes to the ACA designed to shore up some of the insurance markets, and attempts to fix the tax law could see the reverse. An aide to Democratic leadership told The Washington Post they were “sceptical Dems would bail them out of their mistakes.”
“There will be a push for a technical-corrections bill addressing issues arising from the GOP’s tax-reform changes, but the effort will face an uphill climb, given Democratic opposition,” said Isaac Boltansky, an analyst at the policy research firm Compass Point.
Chris Krueger, a strategist at Cowen Washington Research Group, also pointed to recent legislative examples to cast scepticism on the possibility of a corrections bill.
“Do NOT expect a technical corrections bill on taxes anytime soon,” he said in a note to clients. “You know what else is waiting for technical corrections legislation that passed along (nearly) purely partisan lines? ObamaCare and Dodd-Frank.”
Democrats have decried the need for a corrections bill as evidence that Republicans shoved their tax bill through Congress too hastily.
Sen. Ron Wyden, the top Democrat on the Senate Finance Committee,told Bloomberg that Brady’s statement constituted the “ultimate indictment” of the legislation, saying it was “what happens when you move with reckless haste.”
A corrections bill could open the door up for more fights with lobbyists trying to pressure lawmakers to include small changes or carve-outs to benefit their industry.
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