After a planned series of votes on the Trump tax plan were called off last night, GOP senators were scrambling to assuage the concerns of Republican holdouts who suddenly decided that the tax bill would blow out the deficit after one proposal – a so-called “trigger” that would automatically raise taxes if revenue targets aren’t met – was rejected by the Senate Parliamentarian. With the first roll-call vote set for 11 am, Republican leaders were scrambling to have amendments of their own lined up for later in the day, with a vote hoped for by late Friday or early Saturday.
And while global stocks and US futures slid overnight on bill jitters, "risk on" euphoria promptly returned when in the latest Friday morning developments, Senators Steve Daines and Ron Johnson both said they would support the Republican bill following a plan to raise the pass-through deduction – a tax tool overwhelmingly used by small businesses – to 23%.
Senator Daines says he doesn’t see a revenue trigger replacement making it into the final Senate Republican tax bill, adding he thinks bill will pass without needing changes to win Sen. Bob Corker’s support. "That’s going nowhere," he says of revenue raisers to replace the trigger, adding that what Corker is suggesting "is just causing more problems."
"The win that we obtained last night ... really it's a $100 billion tax cut for these Main Street businesses," Daines said Friday on "Fox and Friends First." According to The Hill, Daines said his change would allow the effective tax rate for pass-throughs to fall below 30 percent. Pass-through income can currently be taxed at rates as high as 39.6 percent.
Separately, a spokesperson for Johnson confirmed that the Wisconsin Republican would also be a yes vote. Daines and Johnson had earlier come out against the version of the bill that passed the Senate Finance Committee, saying it didn't do enough to help pass-through businesses.
Pass-throughs are entities such as partnerships and sole proprietorships whose income is taxed through the individual code. Small businesses tend to be pass-throughs. The Senate bill initially included a 17.4-percent deduction for pass-through businesses. Daines's office said the senator has gotten a commitment that the deduction will be increased to 23 percent.
The news sent stock futures surging, mirroring a bump from last night when Sen. John McCain announced that he would vote for the bill, defying speculation that he would instead vote to kill it.
The reason for the surge: if Daines, Collins, and McCain stick to their commitments to back the tax bill - and now Johnson joins - and no one besides Flake and Corker vote against it, the Republican Senate should have enough votes to pass the tax bill.
That said, keep a close eye on McCain...