GOP Tax Plan: Why Cruise Ship Companies Are Winners
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This is Your Money Matters from The Wall Street Journal. Welcome to Your Money Matters. I'm J.R. Whalen in New York. The Republican tax bill passed by the Senate last week is on its way to be reconciled with a House version to be final law. But there's more to the bill than just tax cuts and a revised tax code.
What last-minute amendments were added to the Senate GOP tax bill?
Numerous amendments were inserted into the Senate bill that give an assortment of industries tax breaks. And Wall Street Journal reporter Kate Davidson joins us from our Washington bureau to discuss. So, Kate, some of the beneficiaries of these amendments, like the oil and gas industry, were not a total surprise. But others, like the cruise ship industry, were for some unexpected.
Yeah, that's definitely one that I think just raised some eyebrows. And certainly when we saw a list late in the day on Friday of some of the amendments that were going to be swept up into what's called a manager's amendment, it's kind of a hodgepodge at the very end of all these different ideas and changes that various senators had offered. Strike cruise ship provision certainly was a phrase that stuck out. So we dug into that one and we tried to sort through some others and try and figure out of the couple dozens of amendments that were included, which ones were the most significant and which ones were just fairly unusual, like the cruise ship one. So that was one that was offered by Senator Dan Sullivan from Alaska, where cruise ship tourism is very, very important.
And the bills, the tax bill, included a provision that would have, for complicated reasons, essentially raised taxes on cruise ship lines. And Senator from Alaska said this would disproportionately affect Alaskan communities, especially ones that rely on cruise ship tourism. So that was their justification for that, that it could hurt the economy there. So they offered that one and it made it through.
And many of these amendments inserted into the bill, they're done to appease senators who'd been on the fence in terms of committing to vote for the tax plan. One of those was for Senator Susan Collins of Maine, who had been critical of the Senate tax proposal throughout much of the legislative process.
That's right. Senator Collins, we know, was one of the lawmakers who really used her leverage quite effectively. And she managed to secure a number of commitments and changes. One of the ones that was included in this manager's amendment was a deal to revert the medical expense deduction back to the level that was in place before the Affordable Care Act. So Obamacare changed the law so that taxpayers could only deduct medical expenses that exceeded 10% of their income. It used to be 7.5%. So that is, people with high medical expenses, it was easier for them to, or they could deduct a greater share of those expenses. And the law changed that. So she managed to revert that back to the 7.5% level for two years.
And this was something that earlier she had sought a change in the treatment just for senior citizens. So in the end, she actually got an even better deal. But this was something that the AARP had been pushing for in particular because seniors have very high medical expenses. And this was a big change for them when Obamacare changed the law. So that was a win for their group, but also I imagine for Senator Collins constituents who who cared a lot about this.
Why did the cruise ship industry unexpectedly benefit from a Senate amendment?
And a lot of these amendments, they tend to benefit broad industries or broad groups of people. But something that stood out in your article in The Wall Street Journal was an amendment that benefits a single college in Michigan.
Right. That one was a little tricky. And we should note that in the end, it was Democrats managed to convince some of their Republican colleagues. to vote to strike that provision from the bill. But it got a lot of attention Friday night in the final hours. And it was offered by Senator Pat Toomey of Pennsylvania. And it had to do with a new excise tax on university endowments. And so basically, Senator Toomey said, look, he offered a provision that said colleges that don't take certain kinds of federal funding shouldn't have to pay this excise tax.
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