TAX BILL MOVES TOWARDS PASSAGE
Senate Republicans poised to approve overhaul; changes appease key holdouts.
Faced with impaWASHINGTON — tient conservative voters demanding results, Senate Republicans after some last-minute horse trading appeared poised Friday to approve a major overhaul of the nation’s tax code by slashing tax rates on corporations, small businesses and many individuals while scrapping dozens of longtime deductions.
Brushing aside objections from Democrats that the bill provides a massive tax cut for the wealthy and discounting non-partisan reports that the measure will add staggering amounts of new federal debt, key Republican holdouts indicated Friday they would support the bill, paving the way for the 51 votes needed for passage.
The vote had not yet taken place when this story went to press.
More changesmay still be coming. Unless the House agrees to the Senate bill, a conference committee of Senateand House negotiators will have to resolve differences in the two bills before the first major revisions in the tax code since 1986 can be sent to President Donald Trump for his signature.
Sen. Rob Portman, R-Ohio, who was one of the architects of the bill, is expected to vote for the measure while Sen. Sherrod Brown, D-Ohio, will oppose it.
Having failed earlier this year to scrap the 2010 health law known as Obamacare, congressional Republicans have been under intense pressure to demonstrate to their voters that they can govern and pass a major part of their agenda.
GOP strategists warned Republican lawmakers they could lose the House and Senate next year without passing a tax bill. They feared that traditional Republican financial donors would scale back campaign dollars they funnel to GOP candidates.
But by passing the bill, Republicans will be gambling on the future fiscal health of the U.S. government. Trump has ruled out restraining the out-ofcontrol growth of the entitlement programs of Social Security and
Medicare, which are the main causes of the deficit.
In essence, Republicans are hoping the tax bill will spark econom i c growth and not add trillions to the deficit. But if the Republi- cans are wrong, they will be starving the government of the money it needs to finance entitlement programs, along with national defense, education, criminal justice, roads, bridges and other transportation projects.
“Notching a political win isn’t a good enough reason to throw common sense and legislative responsibility out the window,” said Senate Minority Leader Chuck Schumer, D-N.Y.
Senate Democrats released past statements uttered by virtually every Senate Republican over the past few years assailing massive deficits. In one, Portman is quoted saying in 2014 “our country cannot afford to add trillions of dollars to our national debt over the next decade.”
But in a f loor speech Wednesday night, Portman cited a study by the accounting firm of Ernst & Young claiming “if we had had the tax rate that we have in this proposal, a 20 percent tax rate on these businesses, if we’d had that in place since 2004, there would be 4,700 more U.S. companies today.”
Portman said the reduced corporate tax rate “is going to mean more jobs and more investment coming right here to this country instead of going overseas. It’s also true that there will be more foreign investment here.”
Just as in 2010, when Obamacare passed without a single Republican vote, Senate Republicans made no effort to win the votes of Democrats.
There are some major differences in the House and Senate tax plans.
Both measures reduce the corporate tax rate from 35 percent to 20 percent, although the Senate delays that reduction until 2019.
The Senate bill creates seven individual tax brack- ets compared to just four in the House bill.
And the Senate version kills the financial penalty imposed on Americans who do not buy individual health insurance policies through the market established by Obamacare. The House bill did not address the individ- ual mandate.
The flurry of proposals and changes designed to win votes made it tough for the public — and even some lawmakers — to keep track of what was in and what was out.
Under both bills, the impact on families and prop- erty owners would be sig- nificant.
The Senate bill retains current deductions for home mortgage interest, 401 K retirement contributions, charitable contributions and medical expenses. Both bills end the personal exemption, which allows taxpayers to take a $4,050 exemption for every fam- ily member.
The standard deduction, which is the amount peo- ple who don’t itemize can deduct from their income, wou ld nearly double to $24,000 a year for mar- ried taxpayers and $12,000 for those who are single filers. Currently, the standard deduction is $12,700 for married couples filing jointly and $6,350 for single taxpayers.
The increase in the stan- dard deduction is designed to simplify the code. If Amer- icans choose the new higher standard deduction, they could not take deductions such as home mortgage interest. But they would be able to file their taxes on a single card.
Both the House and Senate version prohibit taxpay- ers from deducting state and local income taxes from their returns. But both versions allow Americans to deduct as much as $10,000 a year in real estate taxes. That was a last-minute change in the Senate bill, which previously repealed the state and local tax deduction, often referred to as SALT.
The non-partisan Congressional Joint Committee on Taxation calculates the Senate bill would add $1 trillion to the nation’s publicly held debt during the next decade. The publicly held debt is money the govern- ment owes to private and public investors who buy treasury bonds or other government notes.
That me a ns u nless lawmakers in the future restrain federal spending or increase taxes, the federal government’s debt com- pared as a ratio of gross domestic product is likely to approach 100 percent, the type of debt the country has not seen since the end of World War II.