Congress passes GOP tax plan
Party-line overhaul now Trump’s to sign
WASHINGTON — The U.S. House moved swiftly in a second vote on the tax bill Wednesday, passing the final version of it and clearing the way for President Donald Trump to sign into law the most extensive tax overhaul in decades.
In a 224-201 vote, House lawmakers approved the measure a second time, a step necessary after last-minute revisions were made in the Senate bill, which passed in that chamber 51-48 early Wednesday.
The final House vote was essentially a formality, because the changes, which were made to comply with Senate budget rules, did not significantly alter the overall bill. But the need for a second vote gave ammunition to Democrats, who had already accused Republicans of trying to rush the tax overhaul through the House and Senate.
“We are five days away from Christmas, but it feels like Groundhog Day,” said Rep. Louise Slaughter, D-N.Y., who denounced the process by which Republicans undertook their tax rewrite as “nothing short of an abomination.”
Rep. Lloyd Doggett, D-Texas, said, “We will be cleaning up this mess and the blunders in this bill all of next year.”
The tax rewrite is the biggest legislative achievement for Republicans since they gained full control of Congress and the White House this year. The tax bill delivers deep and non-expiring tax cuts for corporations while providing temporary tax cuts for individual taxpayers, including the wealthiest Americans.
It is the first major overhaul of the nation’s tax laws since 1986.
Trump, flanked by Republican lawmakers, cheered the passage of the tax overhaul Wednesday, saying “we broke every record.”
The president took a bow at a celebratory White House event shortly after the House finished its last-minute revote. He said the effort had “been an amazing experience” and that it resulted in “the largest tax cut in the history of our country.”
Earlier Wednesday, Trump cheered the tax cuts on Twitter and lamented “the Fake News” and “the defeated Dems” who “demean” the cuts.
The measure drops the corporate tax rate to 21 percent from 35 percent, as Republicans seek to boost U.S. competitiveness and spur economic growth. Trump said Wednesday in a statement that “By cutting taxes and reforming the broken system, we are now pouring rocket fuel into the engine of our economy.”
AT&T, Comcast, Wells Fargo and Boeing, after the tax bill’s passage, announced plans to share a fraction of their bounty with workers.
Trump was quick to celebrate AT&T’s announcement that it would pay a $1,000 bonus to 200,000 workers once the tax bill is signed into law.
“That’s because of what we did,” Trump said at the White House event. “So that’s pretty good. That’s pretty good.”
Comcast said later Wednesday that it will give $1,000 bonuses to more than 100,000 employees. Wells Fargo said it will boost its minimum wage to $15 an hour, as well as donate $400 million to nonprofit and community organizations. Government contractor Boeing said it will provide an additional $300 million for job-training, facility upgrades and charitable giving.
The tax overhaul also provides a tax break to owners of pass-through businesses, whose profits are taxed through the individual code.
And it cuts taxes for individuals, including a lower top rate of 37 percent, down from 39.6 percent. It nearly doubles the standard deduction and doubles the child tax credit, and it doubles the size of inheritances shielded from estate taxation, to $22 million for married couples. But, Republicans set the individual tax cuts to expire after 2025 in order to make the bill comply with budget rules.
In a move that drew significant criticism from lawmakers from states with high
taxes, the bill caps the deduction for state and local taxes at $10,000. Twelve House Republicans voted against the tax bill Tuesday and Wednesday, and 11 of those members were from California, New Jersey and New York, three states with high taxes.
HEALTH LAW MANDATE
The bill also eliminates the health care law’s requirement that most people have health insurance or risk paying penalties, known as the individual mandate, providing Republicans with a victory on health care after their previous failure to repeal and replace President Barack Obama’s health law.
“We have essentially repealed Obamacare,” Trump said at the White House event, boasting that he successfully downplayed the provision to avoid media coverage of the change.
“We didn’t want to bring it up. I told people specifically ‘be quiet with the fake news media because I don’t want them talking too much about it,’” Trump said. “But now that it’s approved I can say: the individual mandate on health care, where you had to pay not to have insurance — think of that one, you pay not to have insurance — the individual mandate has been repealed.”
Trump said Republicans will “come up with something
that will be much better” to replace the mandate.
The nonpartisan Congressional Budget Office estimated last month that repealing the individual mandate would lead to 13 million more people uninsured in 2027 and that premiums in the individual market would increase by about 10 percent.
Lifting the penalty saves the government $338 billion over the next decade, the budget office said, because some of those who go uninsured would have gotten subsidized coverage. Lawmakers used those savings to reduce taxes.
Congressional Republicans, after their failure earlier this year to dismantle the Affordable Care Act, see passage of the tax bill as crucial to proving to Americans they can govern — and imperative for holding onto House and Senate majorities in next year’s midterm elections.
“The proof will be in the paychecks,” Sen. Rob Portman, R-Ohio, said during the Senate’s nighttime debate. “This is real tax relief, and it’s needed.”
Not so, said the top Senate Democrat as the long, late hours led to testy moments Tuesday night.
“We believe you are messing up America,” New York Sen. Charles Schumer told Republicans, chiding them for not listening to his remarks.
Polls have shown that Americans are skeptical that the bill will benefit people other than the wealthy.
Gary Cohn, the White House economic adviser, said he was dumbfounded by the unpopularity of the Republican tax bill and said Trump fought unsuccessfully to strip a provision that mostly benefits wealthy investors.
“To be honest with you, I don’t know,” Cohn said Wednesday at a Washington event hosted by Axios, when asked why the plan lacked public support. Middle-income Americans “are getting the largest percentage tax savings of anyone in the whole distribution. So we have clearly not communicated that.”
Cohn, a former Goldman Sachs Group Inc. president, said public support would increase when the bill is implemented. He said if he could change one thing about the plan, he would strip the carried-interest provision in the tax code that largely benefits Wall Street investors.
Trump, who promised to end the provision during his presidential campaign, was unable to persuade lawmakers to make the change, Cohn said.
“We’ve been trying to cut carried interest — we probably tried 25 times,” Cohn said. “We hit opposition in that big white building with the dome at the
other end of Pennsylvania Avenue every time we tried.”
The average tax cut for the bottom 80 percent of earners would be about $675 in 2018, according to an analysis by the Urban Brookings Tax Policy Center. The top 1 percent of earners would get an average cut of about $50,000 that year, and the top 0.1 percent would get an average of $190,000, according to the group’s analysis.
Asked about the discrepancy on Wednesday, Cohn said “we’re happy to give everyone a tax cut,” but he maintained that middle-class Americans will receive the largest benefit.
BOOZMAN, COTTON REACT
In an interview, Sen. John Boozman, R-Ark., predicted that the legislation will lower taxes for individuals as well as corporations, make American businesses more competitive and fuel economic growth — all without increasing deficit spending.
Changes to the system had to be made, Boozman said.
“The tax code is broken,” he said. “We need something that’s more efficient, more effective, that works for the hardworking Arkansan,” he said.
The legislation will benefit people across the state, he said.
“It doubles the standard deduction, doubles the child tax
credit,” he said. “Just those two items will really help the average Arkansan a great deal.”
In a statement, Sen. Tom Cotton, R-Ark., called the vote “a major achievement” and “a victory for Arkansan families and all working Americans.”
“I’m also very pleased the final bill includes my proposal to repeal the Obamacare individual-mandate tax. This is the most hated part of that terrible law, and I’m glad to see it go,” he added.
In a statement, Gov. Asa Hutchinson praised Congress and Trump “for successfully taking on substantive tax reform,” predicting that it will help Americans in Arkansas and across the nation.
Republicans passed the bill under special procedures that allowed them to avoid a Democratic filibuster in the Senate, where they have a narrow majority. But as a result, they had to abide by budget rules that limited the contents of their bill, and three provisions were deemed by the Senate parliamentarian to run afoul of those rules.
Those components included a provision to allow the use of 529 savings accounts for home-schooling expenses, as well as part of the criteria for determining whether colleges and universities are subject to an excise tax imposed on their investment incomes. The provision naming the bill as the Tax Cuts and Jobs Act was deemed out of bounds, too, because it would not have a budgetary effect.
Senate Democrats challenged the problematic language, which was subsequently removed from the bill, necessitating another vote in the House.
“If you believe it’s an important use of the Democratic minority’s time on the Senate side to strike the title of the bill because it doesn’t actually impact deficit reduction, it is within their right,” said Rep. Rob Woodall, R-Ga. “Does it represent the highest and best use of their time? It does not.”
But Doggett seized on the last-minute development.
“It is a bill that has no name, and of course it has no heart,” he said.
Doggett suggested that the bill could be called the “Donald J. Trump Windfall Bill,” arguing that Trump and his family will be enriched by the tax rewrite.