House sets up a holiday tax tussle
Package of cuts passes as Senate bill faces dissent
WASHINGTON — House Republicans approved their sweeping taxcut package Thursday, setting up a showdown with the Senate, where Republicans are struggling to win support for their own significantly different approach.
Senate GOP leaders, after making some revisions earlier this week, are facing mounting dissent and criticism that their tax plan favors corporations and the wealthy. An analysis by Congress’ bipartisan tax experts on Thursday concluded the Senate plan would raise taxes for some of the poorest Americans by 2021.
House Republicans had an easier time, passing their measure by a vote of 227205, though 13 Republicans voted no.
Republicans hope to send a compromise bill to President Donald Trump by Christmas.
Democrats were unified against the plan, and the GOP defections came from lawmakers in the Northeast and California who were mostly concerned about the proposed elimination of deductions for state and local income taxes, and the capping of property tax deductions at $10,000.
Ahead of the House vote, Trump traveled to Capitol Hill to bolster Republicans worried that if they don’t pass tax reform, they’ll risk voter revolt in next year’s midterm election for failing to keep a major campaign promise, particularly after their failed repeal of the Affordable Care Act.
Trump assured House Republicans he was behind their effort.
“I love you,” Trump told them, according to those who attended the private meeting. “Go vote!”
House leaders celebrated the vote. “Passing this bill is the single biggest thing we can do to grow the economy, restore opportunity and help these middle income families that are struggling,” said House Speaker Paul Ryan, R-Wis.
The Senate plan has key differences and is facing greater hurdles for passage, particularly as senators try to find ways to enhance benefits for middle-income Americans.
Sen. Ron Johnson, RWis., became the first GOP senator to oppose the proposal, saying it did not do enough to help small businesses. Centrist Sen. Susan Collins, R-Maine, has also raised concerns, as have other senators. Republicans can afford to lose only two votes in the Senate, assuming all Democrats vote against their plan.
Concerns were heightened by a report Thursday from the nonpartisan Joint Committee on Taxation that estimated many lowincome earners would end up with tax increases in the latest Senate plan.
Those making between $10,000 and $30,000 a year would pay more in taxes starting in 2021, the committee found. By 2023, people with incomes less than $10,000 also would see tax increases.
All other income categories — including those earning more than $1 million a year — would see tax decreases, according to the report. But in 2027, taxes would go up for every income group under $75,000 because the Senate Republican bill calls for tax cuts and other changes to the individual code to expire at the end of 2025.
The large cut in the corporate tax rate, to 20 percent from 35 percent, would be permanent under the Republican bill.
Sen. Ron Wyden, D-Ore., called the report “jaw-dropping news.”
But Senate Finance Committee Chairman Orrin Hatch, R-Utah, noted that the projections for lowincome people are based on a provision of the Senate bill that does away with the Obamacare mandate that all Americans have health insurance.
If low-income earners opt to drop their health care coverage as a result, they would also no longer receive the Affordable Care Act’s federal subsidies for their premiums. Without those subsidies, which act like tax credits, their taxes would effectively go up.
Hatch said it was unfair to call that a tax increase. “Anyone who says we’re hiking taxes on low-income families is misstating the facts,” he said.
The findings put the bill’s prospects in the Senate further in flux. Even so, the Senate Finance Committee was expected to advance the measure quickly. A full Senate vote is not expected until after Thanksgiving.
Democrats lambasted the package as essentially gutting essential tax breaks to give corporations and the wealthy tax cuts.
The House bill ends student loan interest deductions and medical expense deductions, and it caps the mortgage interest deduction to loans of $500,000, repealing the write-off for second homes. House Minority Leader Nancy Pelosi said the GOP plan “preys on the middle class.”
In a last-ditch gamble to raise revenue, Senate Republicans attached the partial Obamacare repeal, eliminating the tax imposed by the Affordable Care Act’s mandate that all Americans have insurance.
That change, which would go into effect in 2019, would leave an estimated 13 million more Americans uninsured and drive up premium costs by 10 percent. But it would bring in $318 billion over the decade by cutting federal health care subsidies to middleand low-income Americans who choose not to buy insurance.