Republicans have stretched closer to delivering their first big legislative victory, whisking a $1.5 trillion overhaul of business and personal income taxes through the House. Thorny problems await in the Senate, though.
WASHINGTON (AP) — Republicans have stretched closer to delivering the first big legislative victory for President Donald Trump and their party, whisking a $1.5 trillion overhaul of business and personal income taxes through the House. Thorny problems await in the Senate, though.
The House passage of the bill Thursday on a mostly party-line 227-205 vote also brought nearer the biggest revamp of the U.S. tax system in three decades.
But in the Senate, a similar measure received a politically awkward verdict from nonpartisan congressional analysts showing it would eventually produce higher taxes for low- and middle-income earners but deliver deep reductions for those better off.
The Senate bill was approved late Thursday by the Finance Committee and sent to the full Senate on a party-line 14-12 vote. Like the House measure, it would slash the corporate tax rate and reduce personal income tax rates for many.
But it adds a key feature not in the House version: repeal of the Affordable Care Act’s requirement that everyone in the U.S. have health insurance. Elimination of the so-called individual mandate under the Obama health care law would add an estimated $338 billion in revenue over 10 years that the Senate tax-writers used for additional tax cuts.
The nonpartisan Congressional Budget Office has projected that repeal of the mandate would result in 13 million more uninsured people by 2027, making it a political risk for some lawmakers.
The Senate panel’s vote came at the end of four days of often fierce partisan debate. It turned angrily personal for Chairman Sen. Orrin Hatch, R-Utah, as he railed against Democrats’ accusations that the legislation was crafted to favor big corporations and the wealthy.
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“I come from the poor people. And I’ve been working my whole stinking career for people who don’t have a chance,” Hatch insisted.
After the panel’s approval, Senate Majority Leader Mitch McConnell declared, “For the millions of hard-working Americans who need more money in their pockets and the chance of a better future, help is on the way.”
The analysts’ problematic projections for the Senate bill came a day after Wisconsin Sen. Ron Johnson became the first GOP senator to state opposition to the measure, saying it didn’t cut taxes enough for millions of partnerships and corporations. With at least five other Republican senators yet to declare support, the bill’s fate is far from certain in a chamber the GOP controls by just 52-48.
Even so, Republicans are hoping to send a compromise bill for Trump to sign by Christmas.
“Now the ball is in the Senate’s court,” Vice President Mike Pence said after the House vote. Speaking at a conservative Tax Foundation dinner in Washington, Pence said, “The next few weeks are going to be vitally important and they’re going to be a challenge.”
A White House statement that “now is the time to deliver” also underscored the GOP’s effort to maintain momentum and outrace critics. Those include the AARP lobby for older people, major medical organizations, realtors — and, in all likelihood, every Senate Democrat.
Despite controlling both chambers of Congress and the White House, the Republicans are still smarting from this summer’s crash of their effort to dismantle President Barack Obama’s health care law. They see a successful tax effort as the best way to avert major losses in next year’s congressional elections. House Republicans concede they are watching the Senate warily.
“Political survival depends on us doing this,” said Rep. Kevin Cramer, R-N.D. “One of the things that scares me a little bit is that they’re going to screw up the bill to the point we can’t pass it.”
The House plan and the Senate Finance bill would deliver the bulk of their tax reductions to businesses.
Each would cut the 35 percent corporate tax rate to 20 percent, while reducing personal rates for many taxpayers and erasing or shrinking deductions. Projected federal deficits would grow by $1.5 trillion over 10 years.
As decades of Republicans have done before them, GOP lawmakers touted their tax cuts as a boon to families across all income lines and a boost for businesses, jobs and the entire country.
“Passing this bill is the single biggest thing we can do to grow the economy, to restore opportunity and help those middle-income families who are struggling,” said House Speaker Paul Ryan of Wisconsin.
Ryan also said he’d seek to add tax breaks to help Puerto Rico recover from recent hurricanes to a House-Senate compromise.
Democrats said the tax measure would give outsized benefits to the wealthy and saddle millions of moderate-income Americans with tax increases. Among other things, the House legislation would reduce and ultimately repeal the tax Americans pay on the largest inheritances, while the Senate would limit that levy to fewer estates.
The bill is “pillaging the middle class to pad the pockets of the wealthiest and hand tax breaks to corporations shipping jobs out of America,” declared House Minority Leader Nancy Pelosi of California.
Thirteen House Republicans — all but one from high-tax California, New York and New Jersey — voted “no” because the plan would erase tax deductions for state and local income and sales taxes and limit property tax deductions to $10,000. Defectors included House Appropriations Committee Chairman Rodney Frelinghuysen, R-N.J., who said the measure would “hurt New Jersey families.”
Besides Johnson, Republican Sens. Susan Collins of Maine, Jeff Flake and John McCain of Arizona, Bob Corker of Tennessee and Lisa Murkowski of Alaska have yet to commit to backing the tax measure.
Congress’ Joint Committee on Taxation estimated the Senate plan would mean higher taxes beginning in 2021 for many families earning under $30,000 annually. By 2027, families making less than $75,000 would face tax boosts while those making more would enjoy cuts.
Republicans attributed the new figures to two provisions: one ending the measure’s personal tax cuts starting in 2026 and the other abolishing the “Obamacare” requirement that people buy health coverage or pay tax penalties.
Ending the personal tax cuts for individuals in 2026, derided as a gimmick by Democrats, is designed to pare the bill’s long-term costs to the Treasury. Legislation cannot boost budget deficits after 10 years if it is to qualify for Senate procedures that bar bill-killing filibusters.
—Both chambers’ bills would nearly double the standard deduction to around $12,000 for individuals and about $24,000 for married couples and dramatically boost the current $1,000 per-child tax credit.
—Both would erase the current $4,050 personal exemption and reduce or cancel other tax breaks. The House would limit interest deductions to future home mortgages of up to $500,000, down from today’s $1 million. The Senate would end deductions for moving expenses and tax preparation.
Associated Press writers Kevin Freking, Richard Lardner and Matthew Daly contributed to this report.