The odds of a tax bill in the near future appear to be improving after the White House signed off on the corporate tax cut package on Friday. President Trump is expected to sign the bill soon after returning from a trip to Florida for President’s Day weekend.
Although the White House appears confident that Congress will move quickly on a tax overhaul and that the bill will find enough support for passage, two Senate Democrats are pushing for a key piece of legislation to be rejected.
Even before the stock market took a dive and risk became an overused adjective in recent weeks, Democrats in the Senate were saying that cuts to the corporate tax rate were going to incentivize companies to buy back their own stock — a move that they viewed as a way to reduce the value of their own holdings — instead of investing in their companies. And since corporations like to sell stock to investors if they believe their stock price is overvalued, this measure is seen as harmful to the market.
“There is ample evidence that stock buybacks depress the stock price of public companies,” the Democratic Senate memo reads.
Sen. Elizabeth Warren, D-Mass., has been leading the charge, urging Republicans to oppose an amendment by Sen. Ron Johnson, R-Wis., that would allow companies to take the tax cut off their books, effectively reducing the buyback costs. With Senate Republicans only controlling a slim 52-48 majority, that is a formidable victory for Warren.
“This amendment would cost billions of dollars from taxpayers and do nothing to grow small businesses or American companies,” Johnson said, speaking to reporters at the Capitol last week. “It is in the best interest of the American economy for the Senate to reject this proposal.”
Johnson’s office did not immediately respond to a request for comment on the Democratic letter.
Among the other Democrats who signed the letter was the vice president, who issued his own statement, saying the tax overhaul was meant to create jobs, grow wages and improve competitiveness, but that it’s time to work on a “shovel-ready infrastructure bill” and infrastructure spending in general.
“As we work toward those goals, we should look for ways to make the system more responsive to the challenges that Americans face,” Biden said in the statement. “Strengthening our long-term economic competitiveness is one way to do that.”