Tax drama still in play after glitch in the rules

House has to vote again before bill can pass

WASHINGTON – House Republicans on Tuesday passed the most significant overhaul of the tax code in three decades, but the bill hit a late- afternoon glitch when the Senate parliamentarian ruled that three minor provisions in the bill did not comply with strict budget rules and would have to be stripped out.

That forced the Senate to make minor changes before voting on the bill Tuesday night, and the House will have to vote again Wednesday on the tweaked package before Republicans can claim their first major legislative win and deliver the $ 1.5 trillion package to President Trump before Christmas, as he requested.

Senate Republicans are using special budget rules to fast- track the tax bill and block a Democratic filibuster. But those rules require that

every element of the bill has to have a budgetary impact. Democrats asked the Senate parliamentarian to scour the bill for problematic provisions, and she found three — all relatively minor items.

One provisionwould allow529 college savings accounts to be used for home- schooling expenses. Another sets criteria to determine whether private universities’ endowments would be subject to a new excise tax.

The third is even more mundane: The short title of the bill — “The Tax Cuts and Jobs Act” — has no budgetary impact and will have to be nixed.

Tuesday’s 227- 203 vote in the House split mostly along party lines and came after a brief but heated debate, which was interrupted several times by protesters chanting “Kill the bill! Kill the bill!” before they were escorted from the House gallery.

Republicans touted the bill as an engine for economic growth and a boost for middle- class families, while Democrats blasted it as a sop to big corporations and wealthy donors. Twelve House Republicans joined all the chamber’s Democrats to oppose the bill.

The measure squeak through the Senate with a narrow GOP majority before the House votes again Wednesday.

“This is a once- in- a- generation opportunity,” said Senate Majority Leader Mitch McConnell, R- Ky.

It also was a years- in- the- making moment for House Speaker Paul Ryan, R- Wis., who has spent nearly 20 years advocating for tax reform. Ryan took the rare opportunity to preside over the chamber for the vote, banging the gavel and joyfully reading the final vote total as his Republican colleagues erupted in cheers.

“This is profound change, and this is change that is going to put our country on the right path,” Ryan said at a news conference after the House vote. “On January 1, Americans are going towake up with a newtax code.”

The centerpiece is a permanent 40% tax cut for corporations, a change Republicans say is long overdue and desperately needed to make America more competitive in the global economy. Smaller businesses alsowould see their tax burden shrink significantly.

Supporters said the cost of reducing tax collections by $ 1.5 trillion over the next10 yearswould be offset by an explosion of economic growth, but economists said at best that growth would cover one- third of the cost. Non- partisan estimates project the bill could add $ 1 trillion to the national debt over 10 years. And laws designed to prevent deficit spending could kick in as early as next year, forcing cuts to popular programs, including Medicare.

The bill also lowers tax rates for individuals and families temporarily while increasing the standard deduction and the child tax credit. But because the bill also kills or limits key deductions — most notably rolling back the ability of filers to subtract their state and local taxes from their federal tax bill— the effect on individuals would vary.

In a study released Monday, the Tax Policy Center, a non- partisan think tank, concluded that the top 1% of taxpayers, those making more than $ 732,800, would get 20.5% of all the tax benefits next year.

The study also found that for people in the middle of the national income scale — making $ 48,600 to $ 86,100— 91% would see a tax cut averaging $ 1,090, while 7% would see a tax increase averaging $ 910 next year.

“This GOP tax scam is simply theft — monumental, brazen theft from the American middle class and from every person who aspires to reach it,” House Minority Leader Nancy Pelosi, D- Calif., said during the House debate Tuesday.

Republicans dismissed suggestions that the bill was skewed toward the wealthy. “Families at every incomelevelwill get a tax cut,” Ryantold reporters Tuesday. “This is real relief, and people are going to see this in their paycheck before too long.”

The GOP legislation also strikes a major blow against the 2010 Affordable CareAct. It repeals that law’s “individual mandate” requiring most Americans to obtain health insurance.

Republicans failed several times this year to pass legislation to repeal and replace Obamacare, but adding that provision gives them a partial success.