Tax bill treks through Congress
WASHINGTON — Senate Republicans were on the verge late Tuesday of approving a major revision in the federal tax code which includes sizable tax reductions for corporations and small businesses while cutting taxes for most individuals.
Just hours after the House passed the measure by a vote of 227-to-203, Senate Republicans appeared to have the 51 votes needed to pass the same bill. But debate ran well into the night, as everyone wanted their say.
Even after the Senate approves the bill, the drama will not quite be over. Because Senate rules forced Senate Republicans to delete a small section of the House bill, the House will have to vote again Wednesday before the bill is sent to President Donald Trump for his signature.
Republican Sen. Rob Portman of Ohio, one of the chief architects of the bill, will vote for the measure while Democratic Sen. Sherrod Brown of Ohio will oppose it.
In the House, Republicans Pat Tiberi of Genoa Township, Steve Stivers of Upper Arlington, David Joyce of Painesville, Jim Jordan of Urbana, Bob Gibbs of Lakeville and Bill Johnson of Marietta supported the bill while Democrats Joyce Beatty of Jefferson Township and Tim Ryan of Niles opposed the measure.
In a dramatic moment, Brown opened the doors of the Senate and pointed down the hall toward the office of Senate Majority Leader Mitch McConnell, R-Ky. Brown said “Wall Street lobbyist after Wall Street lobbyist” went into McConnell’s office and left with tax provisions that would benefit their own companies.
The Republicans made passage of the bill their top priority this year, with GOP lawmakers and consultants convinced that without a tax bill they would lose control of the Senate and House in elections next year.
But by doing so, Republicans are running smack into intense opposition from voters. Polls show a sizable majority of Americans are against the bill, with many believing it will benefit wealthy taxpayers and companies while providing only token tax reductions to middle-class people.
The nonpartisan Tax Policy Center of Washington confirmed those fears Monday when it concluded that middleincome 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 bill could also lead to tax increases for upper-middleincome 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 floor speech, Tiberi, who is retiring from Congress next month, said “this is a historic day.” He said tax dollars paid to the government are “not our money; it’s our constituents money, and today we are giving back our money to our constituents.”
By contrast, Ryan said that Trump and congressional Republicans “have lied to the American people about the impact of this tax legislation from the beginning,” adding that the measure will “send our national debt skyrocketing.”
The chief features of the bill are the slashing of the corporate tax rate from 35 percent to 21 percent and reduction of the tax rates for what are known as pass-through companies, which include small businesses and 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.
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.
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 point out that if the economy continues to expand at such a fast rate, the Federal Reserve Board will increase interest rates to combat inflation, which could mean higher mortgage rates for homebuyers.
Even more alarming to budget analysts is that the congressional Joint Committee on Taxation has calculated that the bill will 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.
Because the nonpartisan Congressional Budget Office has already projected that even without the tax bill, the government will add nearly $10 trillion in publicly held debt during the next decade. By 2025 the government debt as a ratio to gross domestic product will reach levels not seen since the end of World War II.
“This bill will explode the deficit,” Brown said in his floor speech.
Republicans originally talked of simplifying the tax code, but their effort did not entirely succeed. GOP lawmakers had originally hoped to shrink the number of individual income-tax brackets from seven to three.
But the version which emerged from a conference committee last week of the House and Senate contained 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 401(k) 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.
“Many people who take the standard deduction won’t have to change anything because they haven’t taken deductions,” Portman told Fox News. “Most people won’t itemize. The vast majority of people will do the simpler form.”
But in return, Republicans scrapped the $4,050 personal exemption that Americans could take for themselves and their children.
Starting next year, you will not be able to deduct more than $10,000 of the combined total of your state and local income taxes and your local property taxes on your personal federal income-tax return (or sales plus property taxes in states where there is no income tax). Is your total more than that? If so, you might have been tempted to prepay some of your 2018 income taxes