Senators say they’re going to respect President Donald Trump’s tax priorities on tips and overtime pay. The question arising now is how far they’re willing to take those policies.
Republican fiscal hawks in the Senate are suggesting watering down the House’s proposals to end taxes on tips and overtime, and reduce taxes on Social Security. Sen. Ron Johnson said changing the policies would help win his vote on reconciliation.
“That would be one of the forcing mechanisms, to skinny this thing down and leave that for a second bite of the apple,” Johnson, one of the loudest critics of the policies, said Tuesday. “They’re looking at what would be an effective forcing mechanism that I would find acceptable.”
While paring back these policies could quell some Republicans’ concerns around increasing the deficit (the Joint Committee on Taxation put the price tag on all three of Trump’s proposals at $230 billion), the idea is also creating another political dilemma. The president’s tax priorities were winners on the campaign trail — so much so that even Democrats adopted them, despite liberal economists’ concerns about how they would actually play out.
Many Republicans have elevated the ‘no tax on tips,’ and similar promises, as a show of Trump’s populism.
“I wouldn’t do that. I’m against that,” Sen. Josh Hawley told NOTUS on Tuesday when asked how he feels about rolling back no tax on tips and overtime.
Hawley said he met with the president this week, and Trump himself emphasized the need to keep those provisions in the bill.
“He brought up a no tax on tips, no taxes on overtime, no taxes on Social Security, and he was saying, you know, that’s what will be the most important parts of this bill, which I tend to agree,” Hawley said.
Much of the White House’s messaging around the reconciliation bill’s passage is about the package’s inclusion of measures on no tax on tips or overtime pay and lower taxes on Social Security benefits for senior citizens. The White House has touted the policies as the “largest tax cut in American history.”
The provisions in the House bill largely went unnoticed during the lower chambers’ negotiations, with the energy focused on Medicaid and other welfare programs. In the Senate, Johnson has been critical of the provisions all along, calling them “gimmickry” and “not serious.”
He also told reporters multiple times on Tuesday that he’s “flexible” about what parts of the bill are cut back in exchange for his vote and did not directly answer a question about whether entirely stripping the Trump priorities from the bill is a must-see for him.
Sen. Thom Tillis, who said last week that he wants to see major changes to the no tax on tips provision, was somewhat more optimistic this week. He raised issues last week with how the provision could disproportionately give tax breaks to tipped workers while disadvantaging non-tipped workers with similar incomes. But he told reporters Tuesday that he doesn’t want to see the provision stripped out of the bill entirely.
“We’ve made a lot of good movement on the duration,” Tillis told reporters of the provision. “They’re not permanent, they’re shorter term, and we want to prove that they work, or maybe have some stimulative impact.”
Any changes, however, may not sit well with all Republicans.
“We’re going to accommodate the president’s concerns,” Sen. John Cornyn told reporters when asked if he supports paring down no tax on tips and other provisions. “Obviously, he’s got to sign the bill.”
Then there’s the House, where key lawmakers have signaled that the tax provisions are non-negotiable.
Moderate members such as Rep. Nicole Malliotakis have championed provisions in the bill to eliminate income taxes on social security, and House Ways and Means Committee Chairman Jason Smith touted the House’s version of the bill as delivering on “the promises President Trump made to working Americans.”
Senate Majority Leader John Thune echoed the president’s insistence on the tax provisions.
“They were big priorities for the president and … things he campaigned on,” Thune told reporters Tuesday. “So I would expect to see a number of those campaign commitments adhered to in the legislature.”
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Shifra Dayak is a NOTUS reporter and an Allbritton Journalism Institute fellow. Helen Huiskes, a NOTUS reporter and an Allbritton Journalism Institute fellow, contributed to this report.