by Mitch Kokai
Senior Political Analyst, John Locke Foundation
The Senate is emerging as a possible hurdle to achieving tax reform this year, as Senate Republicans have failed to say which tax breaks they’re willing to take away in order to pay for tax rate reductions, unlike House Republicans who have already offered some ideas.
If Congress doesn’t eliminate big tax breaks, it won’t be able to lower tax rates without blowing out the federal deficit. Republicans have set ambitious goals for tax rates, with President Trump calling to lower the corporate tax rate from 35 percent to 15 percent and House Republicans setting a target of 20 percent.
In their tax reform blueprint, House Speaker Paul Ryan and House Republicans identified three major ways they would raise revenue: One would be eliminating all itemized deductions, except for those for mortgage interest and charitable giving; another would be to prevent businesses from deducting the cost of interest on loans; and last would be the border adjustment.
While border adjustment has stirred the most recent controversy, all three would be difficult to pass. While none has a strong advocate in the Senate, all three have critics.
“That’s obviously one of the problems you have with any kind of tax reform, is everybody loves their tax preference,” said Sen. Ron Johnson, R-Wis.