Questions are swirling about whether the Senate’s parliamentarian will kill a major tax increase in Republicans’ megabill — potentially blowing a big hole in their plans.
Parliamentarian Elizabeth MacDonough could decide that a $116 billion provision raising taxes on foreign companies violates the chamber’s internal rules about what may go into a reconciliation measure, which would be immune to Democratic filibusters.
Republicans are concerned that she will see the provision as tantamount to overriding tax treaties the U.S. has with other countries. If that’s the case, she could decide the matter belongs under the jurisdiction of the Senate Foreign Relations Committee — which would be a problem for Republicans because their reconciliation plans never mentioned that panel.
That would force lawmakers to redraft their plans or drop the provision altogether, leaving them scrambling to cover the resulting budget hole.
“We’ll see what she does,” said Rep. Kevin Hern (R-Okla.), a member of the House Ways and Means Committee. “I don’t want to speculate about anything.”
The issue is now being discussed behind closed doors as lawmakers eye changes to a sprawling tax package approved last month by the House that Republicans hope to push into law by their July 4 recess.
In the Senate, Republicans ordered nine other committees to produce pieces of their reconciliation plan, with much of effort focused on the tax-writing Finance Committee.
The tax provision in question, dubbed a “revenge tax,” would impose as much as a 20 percent levy on foreign companies whose governments impose taxes on US firms deemed discriminatory. House Republicans designed the tax to counter efforts by other countries to impose special taxes on American internet giants long accused of ducking tax authorities abroad.
Some tax vets see another potential problem with the provision when it comes to persnickety reconciliation rules: That it’s not a sincere effort to raise money.
The provision could be seen as less as a way to help defray the cost of Republicans’ tax cuts than as a chit to be traded in negotiations between the U.S. and other countries over how they’re taxing big multinational companies — and that too might be interpreted as a violation of reconciliation guidelines.
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