GOP lauds 'historic' day; snag may force second House vote
After frustrating year, Republicans see tax bill as successful party win.
Republic ans WASHINGTON — took a huge step toward reversing their string of legislative disappointments Tuesday as the House approved a major revision in the federal tax code that includes substantial tax reductions for corporations and small businesses as well as tax cuts for most individuals.
It’s not clear yet when the legislation will reach President Donald Trump’s desk. A procedural snag could cause the House to vote again today, though it’s not expected to affect the outcome. The Senate was scheduled to vote Tuesday night.
Assuming passage, the tax overhaul would give President Don- ald Trump his biggest legislative accomplishment since taking office in January.
The Senate and House — without a single Democrat voting in favor — earlier approved versions of bills that contained slight differences that were then ironed out by a conference committee of House and Senate members. Details of the restructured bill were made public only on Friday.
Before the procedural snag was realized, the House voted 227-203 to approve the bill. No Democrats voted in favor and just 12 Republicans were opposed, most from California, New York and New Jersey. All 12 Ohio Republican House members voted in favor.
The GOP made passage of the bill its top priority this year, with Republican lawmakers and consultants convinced that without a tax bill, they would lose control of the Senate and House next year.
The votes come as polls show a sizable majority of Americans oppose the bill, with many believing it will benefit wealthy taxpayers and companies while providing token tax reductions for middle-class people.
The non-partisan Tax Policy Center of Washington confirmed some of those fears Monday when it concluded that middle-income households will save an average of $900 in taxes in 2018 while those households with annual incomes ranging from $308,000 to $733,000 would save about $50,000 next year in taxes.
The same report calculated that 80 percent of American households will save taxes next year, five percent would face a tax increase and the rest would pay about the same amount as they currently do.
The complex and multi-faceted bill could also lead to tax increases for upper middle-income Americans who own expensive homes in Ohio as well as the high tax states of California, New York, Illinois, New Jersey, Massachusetts and Maryland.
In a brief floor speech, Rep. Pat Tiberi, a Republican from suburban Columbus, who is retiring from Congress next month, said “this is a historic day,” adding the tax dollars flowing to the government is “not our money; it’s our constituents’ money and today we are giving back our money to our constituents.”
Shortly before the vote, House Minority Leader Nancy Pelosi, D-Calif., assailed the bill as a “Frankenstein monster” which “will come back to haunt” Republicans.
She denounced as “ludicrous” the Republican “claim that these giveaways to the wealthy will pay for themselves,” adding in a “few minutes Republicans will vote to explode catastrophically our debt.”
The chief impact of the bill is to slash the corporate tax rate from 35 percent to 21 percent and reduce the tax rates for what are known as pass-through companies, which include small businesses of law firms.
In essence, Republicans are gambling that companies will plow their tax savings into greater investment in factories and equipment while hiring more workers and paying them higher wages. They insist that will increase economic output to more than 3 percent a year.
“Tax reform will get us a three percent economy,” said House Speaker Paul Ryan, R-Wis.
But a number of analysts contend that companies already are awash in cash and are more likely to funnel their savings into stock buybacks or dividends for shareholders.
In addition, the economy already is expanding at a brisk rate. According to the U.S. Bureau of Economic Analysis, the nation’s gross domestic product expanded at a 3.1 percent rate in the second quarter of this year and 3.3 percent in the third quarter.
Analysts say that if the economy expands at too fast a rate, the Federal Reserve Board will increase interest rates to combat inflation, which could mean higher mortgage rates for home buyers.
The congressional Joint Committee on Taxation also calculates that the bill could add $1 trillion during the next decade to the publicly held debt, which is money the government owes to private and public owners of treasury bills and other federal notes.
Republicans originally talked of simplifying the tax code, and the original House bill shrunk the number of individual income tax brackets from seven to three.
But the version that emerged from the conference committee included seven individual tax brackets ranging from a low of 10 percent to a high of 37 percent.
Although many popular deductions, such as those for home mortgage interest, charity and 401K retirement accounts remain, the bill is encouraging many Americans not to itemize their returns by doubling the standard deduction to $12,000 for single taxpayers and $24,000 for those filing jointly.
The rationale behind the increase is Americans will take the standard deduction as opposed to adding up a list of deductions.
But in return, Republicans scrapped the $4,050 personal exemption that Americans could take for themselves and their children. It also allows Americans to deduct no more than $10,000 in state and local taxes, including property taxes.
The votes on the tax bill follows a failed effort by Republicans in Congress to repeal Obamacare, the federal health care program that extended coverage to millions of Americans who did not previously have it. But the tax bill gave the GOP a consolation prize on health care. The legislation eliminates fines imposed on Americans who do not buy the federally subsidized individual health insurance policies that were made available through the 2010 health law.
The CBO projects the move will lead to more than 10 million people dropping their insurance policies.