House tax cuts face big change in Senate
Rates reduced, but some popular deductions end
The tax bill passed by the House on Thursday dramatically cuts the top corporate rate and lowers rates for individuals but takes away popular deductions that millions of people rely on, such as for state and local income taxes, medical expenses and student loan interest.
But don’t call your accountant yet. Many of those provisions may not survive because the Senate is pondering a significantly different measure and the final tax bill remains up in the air.
The Senate bill, which faces a vote after Thanksgiving, scraps the individual tax cuts after 2025 to keep the budget deficit from ballooning. It also takes a new swing at Obamacare by repealing its mandate for insurance coverage.
House leaders said their bill would provide a tax cut for every income group. Under the Senate proposal, by contrast, lower- and middle-income families would pay higher taxes after the rate cuts expire and would have less access to affordable health insurance, according to an analysis by the Joint Committee on Taxation.
White House press secretary Sarah Sanders hailed the vote as a “big step forward fulfilling our promise to deliver historic tax cuts for the American people by the end of the year.”
“A simple, fair, and competitive tax code will be rocket fuel for our economy, and it’s within our reach,” Sanders
said. “Now is the time to deliver.”
Whether the vote is a sign one-party government under Trump has started to click — or whether it’s a pyrrhic victory that founders in the Senate like the GOP’s earlier attempt to repeal and replace the Affordable Care Act — will be decided in coming weeks.
Oregon Sen. Ron Wyden said tax policy is “tedious stuff ” that doesn’t always capture the public’s attention, but health care resonates. “Now that they have made this a health care issue, I can tell you we’re hearing from grass-roots groups all over this country,” Wyden, the top Democrat on the Senate Finance Committee, told reporters. “I don’t think they’re developing much momentum.”
Republicans in the Senate hold just 52 seats, meaning they can afford to lose just three votes if all Democrats vote against it. Already Sen. Ron Johnson, R-Wis., said he cannot vote for the current plan, and a few other GOP senators have raised concerns about elements of the Senate package.
Senate GOP leaders plan to bring their tax bill to the floor the week after Thanksgiving. The House and Senate will then have to reconcile their competing bills — and pass a final compromise through each chamber again. The House is scheduled to be in session for only 12 more days in 2017, and the Senate has 16 days left on its calendar.
That leaves lawmakers little time to hash out a deal on a complex and contentious piece of legislation. The bill will have to compete with other priorities, including a must-pass spending bill to keep the government open past Dec. 8, when current funding will run out.
In the middle will be Trump, who has proved to be an unpredictable and easily distracted ally for congressional Republicans. During the health care debate, the president hailed the House GOP proposal to replace Obamacare, only to call that bill “mean” when the Senate took up the measure.
That may give some Republicans pause as they negotiate key details of the tax bill and take heat from Democrats gunning to pick up seats in the 2018 elections. Democrats have remained united in their opposition to the tax overhaul, forcing Republicans to walk a political tightrope as they try to minimize defections within their own ranks.
House Speaker Paul Ryan, R-Wis., was able to keep his fractious GOP conference mostly unified, though 13 Republicans voted against the bill. Most of those bucking the leadership were from New York, New Jersey and California, high-tax states whose residents would be hit by the bill’s scaled-down deduction for state and local taxes.
Before the vote, House Republicans met with Trump, who has long promised “massive” tax cuts for the middle class that would lead companies to expand and hire. Lawmakers said the president didn’t get into any policy specifics Thursday and made only passing reference to the differences between House and Senate proposals.
“He did complain that it’s not bipartisan,” said Rep. Fred Upton, R-Mich.
During a sharply partisan floor debate Thursday, proponents of the bill argued it would boost to the economy and provide relief to middle-class families.
“Passing this bill is the single biggest thing we can do to grow the economy,” Ryan said in his closing pitch. “This plan is good for people of all walks of life.”
But critics warned that higher deficits would become a drag on the economy and trigger budget laws that force cuts to Medicare.
“Today the Republicans have brought forth a bill that is pillaging the middle class to pad the pockets of the wealthiest,” said House Democratic leader Nancy Pelosi of California. “It’s not even a tax cut. It’s a tax scam.”