House OKs GOP bill to preserve tax cuts

Democrats oppose it as favoring businesses, wealthy individuals

WASHINGTON – Republicans have sped legislation through the House to expand their massive new tax law, capping their session for the year as they rush out of town to face voters in the November elections.

The new bill would make permanent the individual and small-business tax cuts in the law.

Friday’s vote was 220-191 in the Republican-led House to approve the legislation. It’s the second tax-cut proposal that Republican leaders have pushed in less than a year.

The vote was mostly along party lines. Democrats continued their solid opposition to tax-cut legislation, asserting it favors corporations and wealthy individuals over middle-income Americans.

At the same time, several Republican House members, facing tough reelection fights in the high-tax, Democratic-leaning states of New York and New Jersey, voted against their party’s bill.

The GOP lawmakers are pushing to hold onto their seats in relatively affluent suburban districts where President Donald Trump is unpopular.

Residents in those states could see substantial increases in their federal tax bills next spring because of the $10,000 cap on state and local deductions in the tax law.

The new legislation would make the cap permanent.

Prospects for the legislation in the Senate are weak, given the slim Republican majority and concern over the potential for further blowing up the deficit with new tax cuts – without corresponding new revenue sources.

The sweeping rewrite of the tax code that Republicans hustled through Congress late last year, signed into law by Trump as his signature legislative achievement, is expected to add about $1.5 trillion to the deficit over 10 years.

House Republicans portray the tax legislation as championing the middle class and small businesses.

In the eight months since the tax law took effect, “We’ve seen an economic turnaround with more jobs, bigger paychecks and historic Main Street optimism,” Rep. Kevin Brady, R-Texas, chairman of the tax-writing House Ways and Means Committee, said before the vote.

In House debate on the bill, Democrats continued to denounce the existing tax law and new proposal, and repeatedly pounded on their impact on the already mounting deficit.

The Republicans will seek to fill the hole by cutting deeply into Medicare and Social Security, Democratic lawmakers warned.

“This is all borrowed money that will go to corporations and high-income earners,” said Rep. Richard Neal of Massachusetts, the senior Democrat on the Ways and Means Committee. The new legislation “is another reckless tax cut for the wealthy that leaves behind average, hardworking families.”

While the new law slashed the corporate tax rate permanently from 35 percent to 21 percent, its tax cuts for individuals and the millions of U.S. “pass-through” businesses expire in eight years.

The “pass-through” businesses funnel their income to owners and other individuals, who then pay personal income tax on those earnings, not the corporate rate.

They are allowed under the new law to deduct 20 percent of the first $315,000 of their earnings.

The legislation clearing the House on Friday would make the cuts for individuals and pass-through businesses permanent.