House clears way for tax cuts
Narrow vote on budget suggests tough road ahead
WASHINGTON — The Republican race to overhaul the tax code broke into a sprint Thursday, with House members narrowly clearing a budget blueprint that would allow a tax bill to pass Congress without any Democratic votes, and Senate leaders signaling that the bill could be introduced, debated and approved in both chambers by the end of November.
Those ambitions are already complicated by difficult math, both in terms of tax revenues and vote counts. The budget vote put those competing factors on display, with 20 Republicans defecting and the resolution nar-
rowly passing, 216-212, in part over concerns about the possible elimination of a tax break that disproportionately benefits residents of high-tax states. A potential reduction in contribution limits for 401(k) retirement accounts also appears to be stoking an intraparty fight.
Neither the retirement issue nor the squabble over the deduction for state and local taxes was resolved on Thursday, but party leaders vowed to push ahead at an even faster pace than they had previously outlined.
Rep. Kevin Brady, R-The Woodlands, the chairman of the House Ways and Means Committee, said his committee will introduce a bill on Nov. 1 and begin amending it on Nov. 6.
John Cornyn of Texas, the No. 2 Senate Republican, told reporters that the Senate will follow about a week behind the House. “We need to get the tax bill out of the Senate by Thanksgiving,” he said. Privately, Republican leaders echoed that aggressive timeline.
The exacting pace is meant to maximize party cohesion and neutralize attacks by Democrats and business groups.
If Republicans stick to it, they will speed what could be a 1,000-page piece of legislation, affecting every corner of the U.S. economy, through the House and the Senate in less than three weeks.
Democrats were swift to criticize the approach, saying it was an attempt to hide tax changes that will hurt, not help, middleclass families.
Sen. Ron Wyden of Oregon, the top Democrat on the Senate Finance Committee, said the bill was shaping up to be “a bunch of false promises to the middle class.” Republicans, he said, “know the details — the specifics of what they’re really about — will be hard to argue in the sunlight.”
Lawmakers and committee staff members must still resolve some of the thorniest issues before they can release a bill, including where to draw income lines for tax brackets, how high to set the top personal income tax rate and how to ensure that major changes to the way that multinational corporations are taxed do not encourage them to shift more money overseas.
The biggest question is how to offset enough tax revenue that will be lost from cutting rates to remain within the rules of the Senate budget reconciliation process, which allows Republicans to bypass a Democratic filibuster.
The budget measure approved Thursday would allow for a tax bill that adds as much as $1.5 trillion to federal deficits over a decade, at a time when the federal government’s debt has already topped $20 trillion. The deficit for fiscal 2017, which ended Sept. 30, totaled $666 billion, an increase of $80 billion from the previous year.
The outline of the tax plan unveiled in September would cut the corporate income tax rate to 20 percent, from 35 percent; collapse individual income tax brackets from seven to three or four, with tax rates of 12 percent, 25 percent and 35 percent, and possibly one higher; and nearly double the standard deduction, to $12,000 for individuals and to $24,000 for married couples filing jointly.
The budget measure passed over the loud protests of House members from New York and New Jersey, who worry that the blueprint will doom the current deduction for state and local taxes — a benefit of great importance to taxpayers in their states. Eleven of the 20 Republicans who voted no were from those two states.
“This isn’t over,” one of those lawmakers, Rep. Tom MacArthur, R-N.J., said after the vote. “I am confident we’ll reach an agreement. And if we don’t, then I don’t see how we can move forward.”
A budget blueprint passed by the House earlier this month called for a more aggressive approach on deficits and spending cuts. In addition to laying the groundwork for a tax bill, the House’s plan would have instructed committees to come up with at least about $200 billion in savings. The House’s plan also called for a tax overhaul that would not add to the deficit. But the House ultimately agreed to approve the Senate version of the budget to speed the tax overhaul effort.
House Republicans were “asked to vote for a budget that nobody believes in so that we have the chance to vote for a tax bill that nobody’s read,” Rep. Matt Gaetz, R-Fla., complained this week.
Rep. Diane Black, R-Tenn., the chairwoman of the House Budget Committee, acknowledged that taking up the Senate plan was not an ideal outcome, but she talked up the promise of overhauling taxes.
“President Trump is with us on this, and I agree that we must move quickly,” she said.