Senators expect tax draft soon

Congressional Republicans are moving forward with a plan to overhaul the federal tax system by the end of the year despite not having released a draft of the bill. Kansas lawmakers said they expect one in the coming weeks.

The ambitious goal to reduce taxes on individuals and businesses and reform the tax code comes with pressure after Congress' failure to repeal and replace the Affordable Care Act. Sen. Lindsey Graham, R-S.C., said Republicans would be "dead" if they didn't manage to finish tax reform.

"If we don't cut taxes and we don't eventually repeal and replace Obamacare, then we're going to lose across the board in the House in 2018," Graham told CBS's Face the Nation.

Rep. Roger Marshall, R-Kan., said he thought House members would get it done and senators understood that "failure is not an option."

"The House is going to get this accomplished. I have absolute faith that we'll get it done," Marshall said. "I think the Senate will follow suit as well."

Marshall and Rep. Lynn Jenkins, R-Kan., said they expect a House tax reform plan shortly. Sen. Pat Roberts, R-Kan., said a Senate version would come in the next several weeks.

"We have closely examined all aspects of the tax code and have a good sense on how best to reform the system," Roberts said.

Republicans' plan to overhaul the tax system would reduce taxes on individuals, corporations and pass-through entities, like LLCs, and reduce the number of tax brackets. It also would eliminate some deductions, increase the standard deduction, provide a greater child care tax credit and repeal a tax on estates worth more than $5.49 million, or $11 million for married couples, passed on to another generation.

Congress's previous effort to repeal the Affordable Care Act died in the Senate, but Marshall said he thought Congress was already further along on a tax plan than they were on a health care overhaul.

"When health care came out, I heard three different choirs singing," Marshall said. "I heard the president singing a tune, I heard the House singing a tune and I heard the Senate singing a tune. And I think, right now, you're seeing all three of those entities singing the same song."

Bob Beatty, a political science professor at Washburn University, said he didn't think failure would harm Republicans' midterm election efforts, but said he thought it could continue to stall efforts to work on other legislation.

"If it doesn't get passed, it would just look like Trump -- the self-proclaimed great dealmaker -- can't get any deals done in Washington," Beatty said.

While the framework lacks some key details and analysis, it has already drawn criticism for its resemblance to the since-repealed income tax cuts championed by outgoing Gov. Sam Brownback, a Republican. Marshall and Jenkins, however, have said the two are "apples and oranges."

The federal framework lowers tax rates on individuals, corporations and pass-through entities, and reforms several other components of the tax code. Kansas' plan lowered rates and eliminated taxes on LLCs, but didn't come with other significant reforms. House and Senate budgets also call for spending cuts.

In both cases, however, lawmakers have said the cuts would spur greater economic growth and help make up for reduced government revenue.

"That's exactly what the Kansas premise was," Beatty said.

Brownback promised the Kansas cuts would be a shot of adrenaline to the economy, but the state faced years of budget shortfalls and increased sales taxes. The tax cuts were abandoned earlier this year when a supermajority of the Kansas Legislature overrode Brownback's veto to repeal them.

Without a complete bill, analysis is slim, but the Center on Budget and Policy Priorities said it could add $1.5 trillion to the deficit. The Tax Foundation claims corporate income tax cuts will be beneficial for individuals when accounting for broad economic effects of tax cuts.

The Tax Policy Center also contends most of the tax break's benefits would go to the wealthiest earners. Since that analysis, House Speaker Paul Ryan has announced Congress may maintain higher taxes on upper-level earners and have four tax brackets instead of the proposed three.

"Tax reform is complicated and studies such as this one, done with partial information and broad assumptions, can miss the mark, by either overestimating or underestimating certain variables in their calculations," Jenkins' spokesman, Michael Byerly, said in an email.

Congress is expected to pass tax reform through the budget reconciliation process, which means senators only need 50 votes -- with Vice President Mike Pence breaking a tie -- to pass it and avoid a filibuster by Democrats.

Credit: By Allison Kite allison.kite@cjonline.com