Republican Oklahoma Rep. Josh Brecheen sent a letter to the Senate’s tax-writing committee Thursday to urge the upper chamber to preserve a provision in President Donald Trump’s “big, beautiful” bill that closes a loophole exploited by foreign tobacco producers.
Brecheen, a member of the conservative House Freedom Caucus (HFC), is calling on Senate Finance Committee chairman Mike Crapo and members of the tax-writing panel to maintain a provision in the House-passed bill that closes a loophole known as the “double duty drawback.” The Oklahoma Republican argues that closing the loophole is a “critical” pay-for in the president’s bill that would save more than $12 billion over a ten-year period, according to a copy of the letter obtained by the Daily Caller News Foundation.
“We urge the Senate not to revive this loophole that is exploited by foreign tobacco producers to game the U.S. market,” Brecheen told the DCNF in a statement. “This loophole unfairly favors foreign companies, who get to dodge paying excise taxes while claiming tax refunds they never earned, while American businesses are forced to bear the brunt of billions in fraudulent pay-outs.”
“The Trump Administration recognized this anti-American policy and tried to fix it in 2018, but it’s up to Congress to finish what President Trump started and end this unfair practice that cheats American taxpayers and undermines fiscal responsibility in the reconciliation bill,” Brecheen added.
Senate Republicans are racing to pass a Senate-amended version of the House-passed bill by Senate Majority Leader John Thune’s July 4 deadline. House GOP leadership has urged Senate Republicans to tread lightly on making major changes to the bill, which could jeopardize the tax and spending package’s passage when it returns to the House for consideration.
Sixteen conservative GOP lawmakers, including HFC chairman Andy Harris, signed onto the letter. The cohort, most of whom are HFC members, argue the “double duty drawback” loophole allows foreign tobacco companies to effectively receive taxpayer-funded subsidies by skirting federal excise taxes while netting a refund on taxes they do not pay.
“The House has already voted to repeal this loophole, and we cannot afford to let critical pay-fors — especially one as common-sense as this — fall out of the bill in the Senate,” the lawmakers wrote. “Removing sizeable pay-fors from the Big, Beautiful Bill undermines fiscal responsibility in a bill where deficit neutrality is critical to its final passage.”
The HFC has warned Senate Republicans that they will not accept lesser spending reform than the roughly $1.6 trillion in spending cuts over a ten-year period they helped secure within the House-passed bill. Thune told the DCNF Wednesday that he intends to maintain or go beyond the House-passed spending reduction target.
The Senate Finance Committee, which is responsible for major portions of the president’s landmark bill, including reforms to Medicaid and green energy tax breaks, has yet to release text outlining their panel’s changes to the House bill.
A spokesperson for the Senate Finance Committee did not immediately respond to the DCNF’s request for comment.
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