Rubio falls in line on Republican tax bill
With passage assured, voting expected Tuesday
Negotiators satisfy Florida Sen. Marco Rubio by slightly expanding a child tax credit.
WASHINGTON — Key holdouts on the GOP tax bill fell in line Friday, boosting momentum for passage as Republicans released the final version of their tax overhaul ahead of next week’s expected vote.
Leaders won over Sen. Bob Corker, R-Tenn., who had been the Senate’s lone GOP opponent of the $1.5 trillion package because he feared it added too much to the deficit. And negotiators satisfied Sen. Marco Rubio, R-Fla., by slightly expanding a child tax credit to help working-class families.
The new support makes passage of President Donald Trump’s top year-end priority, which was in jeopardy amid prolonged GOP infighting, more likely.
Voting could begin Tuesday.
“Every bill we consider is imperfect and the question becomes is our country better off with or without this piece of legislation,” Corker said in a statement. “I think we are better off with it.”
“Under this bill the working class, middle class and upper middle class get skewered while the rich and wealthy corporations make out like bandits,” said Senate Minority Leader Chuck Schumer, D-N.Y. “It is just the opposite of what America needs.”
It did not appear that Corker demanded changes, as others have, before giving his backing. Rubio had threatened to vote against the measure Thursday unless the child tax credit provision was enhanced, but his office said he would now support it.
White House press secretary Sarah Huckabee Sanders said Trump “greatly appreciates” support from Corker, who called the president.
The final version of the Tax Cuts and Jobs Act includes several compromises that forced Republicans to scale back on aspirations to vastly lower individual rates and create a simpler code that would allow Americans to file returns on a postcard.
The bill lowers corporate rates from 35 percent to 21 percent. It drops rates for many individuals, too, but those cuts are set to expire in 2025.
The new top individual rate, 37 percent, kicks in at annual income levels of around $500,000 for individuals and $600,000 for couples, slightly above today’s $470,000 threshold for the top 39.6 percent rate. But that income level is far from the $1 million cutoff once envisioned by Republicans, who face criticism that the bill favors the wealthy and corporations.
The bill keeps seven individual brackets, but with revised rates and income levels that Republicans say should result in lower taxes for many Americans.
But several studies have found those savings would fade out over time, particularly after the individual rates expire.
The package, drafted without Democrats, fundamentally changes the tax code by repealing many popular deductions, including capping the state and local tax write-off at $10,000 and limiting mortgage interest deductions to loans of up to $750,000. Those changes are likely to hit hardest in New York, Illinois, California and other high-cost states, where property and state income tax deductions are widely used.
It doubles the standard individual deduction to $24,000 for couples, but also does away with the $4,050-per-person personal exemption used by many to lower their tax bills.
The bill retains the estate tax on the wealthy — something that Republicans have long wanted to kill. But it will double the exemption to $22 million. It also repeals the alternative minimum tax for businesses, but retains it for individuals with a higher income threshold.
On the business side, negotiators Friday pushed the corporate repatriation rate to 15.5 percent on firms that bring overseas profits back to the United States — higher than the 10 percent rate once envisioned or the 14 percent in an earlier compromise — as they searched for additional revenue to cover the costs of other changes.
Final negotiations also abandoned several highprofile GOP provisions that ran into steep resistance. Among those things not included in the final bill is the proposed taxation of in-kind tuition payments for graduate students and the proposed repeal of deductions for private activity bonds used by municipalities to finance public projects. Deductions for student loan interest, also once targeted for elimination, were preserved.
The package keeps in place a decades-old tax rule Republicans had wanted to repeal, the Johnson Amendment, which prohibits churches and nonprofits from engaging in political activity.
Winning back support from Rubio and Corker was crucial as Republicans can lose no more than two votes for passage in the Senate, where they have a narrow 52-48 majority.
Other GOP potential holdouts have not announced their votes but are expected to be in support.
Vice President Mike Pence will be on hand next week in case he is needed to break a tie.
Negotiators met Friday morning to finish the bill before its release.