House GOP poised to pass its tax bill as Senate plan suffers setbacks

In Nation
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House Republicans on Thursday are poised to advance a far-reaching bill that would remake the federal tax code, hoping to generate new momentum for the $1.5 trillion cut after new speed bumps emerged this week in the Senate.

President Trump is scheduled to visit the Capitol shortly before the early afternoon vote, speaking to Republican lawmakers behind closed doors to urge them to support the .

GOP leaders are confident that the pep talk will not be necessary. Fewer than a dozen of the 240 House Republicans said they were opposing the bill or had lodged strong objections as of Wednesday morning. The GOP can lose up to 22 votes and still pass the bill if all 434 sitting members vote Thursday.

“It’s in our DNA to do this,” said Rep. Richard Hudson (R-N.C.), explaining why the tax bill has not been as internally divisive as the health care push earlier this year. “We may fight over the details vigorously, but end of the day, we’re going to deliver tax reform.”

House Majority Whip Steve Scalise (R-La.) said Wednesday the vote count was “looking real good” after weeks of working with individual members to explain the plan and address objections that ranged from the parochial to the fundamental.

“I think most people know how important it is to cut taxes and get the economy moving again, and this bill does that,” he said.

House Republicans, however, will be voting on the bill with key questions unanswered.

Trump and GOP leaders have long claimed that their plan will create economic growth that will offset the bill’s $1.5 trillion revenue cut, negating any long-term impact on the national debt.

House Ways and Means Committee Chairman Kevin Brady (R-Tex.) told reporters last month that “dynamic scores” of the tax plan, taking economic growth into account, would be available before a floor vote. But neither the Joint Committee on Taxation or the Trump administration have released any analysis showing whether the GOP’s economic claims are viable.

One optimistic study of an earlier iteration of the House bill, by the conservative-leaning Tax Foundation, found that it would in fact create 890,000 jobs and marginally increase wages and growth over the long term. But that would offset only a portion of the bill’s total cost, adding roughly $1 trillion to the budget deficit over the long term.

The House bill delivers more than 80 percent of its overall cuts to corporations, business owners and wealthy families who are subject to the federal estate tax, according to estimates released by the Joint Committee on Taxation, Congress’ nonpartisan tax analyst. Most middle-class Americans would see an immediate tax cut, however, due to a lowering of individual tax rates, the near-doubling of the standard deduction, and a larger Child Tax Credit.

But many households who currently itemize their deductions — taking advantage of write-offs for state income taxes, medical expenses, and more — could see immediate tax increases. In future years the benefits of the bill for individuals wane due to the phaseout of a key tax credit and the use of a slower measure of inflation to recalibrate bracket levels.

It remains unclear whether the final tax bill will resemble anything like what the House is expected to pass Thursday. A Senate version of the bill, titled the Tax Cuts and Jobs Act, contains major differences — including a controversial repeal of the Affordable Care Act’s mandate that individuals purchase health insurance.

That provision would save the government about $300 billion over the next decade as it paid out less in insurance subsidies for low- and middle-income Americans, according to the nonpartisan Congressional Budget Office. The change would also, according to the CBO, result in 13 million more Americans going without coverage.

The Senate bill also takes a considerably different approach to the taxation of multinational corporations, phases in a lower 20 percent corporate tax rate and phases out virtually all individual tax cuts after 2025 to comply with the chamber’s complex budget rules. Republican Senators say those individual tax cuts will eventually be extended, either later in the legislative process for their bill

And with key Republican senators balking, and the GOP holding only a two-vote Senate majority, the bill could still change drastically. Sen. Ron Johnson (R-Wis.) said Wednesday he was unwilling to support either the House or Senate bills unless major changes are made to the way businesses are taxed, while Sen. Susan Collins (R-Maine) reiterated that it would be “a mistake” to pursue the individual mandate’s repeal in the tax bill.

Several other GOP senators, including Bob Corker (Tenn.), John McCain (Ariz.), and Lisa Murkowski (Alaska), have yet to declare support for the bill.

The Senate Finance Committee continued a multiday meeting to debate and amend the bill on Thursday. Chairman Orrin G. Hatch (R-Utah) said Wednesday that the session could drag into the weekend as senators process hundreds of amendments that have been filed, most of them by Democrats who are seeking to highlight unpopular parts of the GOP bill.

One political pothole in the Senate bill is its complete elimination of the deduction for state and local taxes, also known as “SALT.” That could repel House Republicans representing such high-tax taxes as New York, California and Illinois who are currently supporting the House bill, which preserves a limited deduction for up to $10,000 of property taxes.

Republican leaders expect to resolve the differences between the House and Senate bills, should they emerge, in a conference committee. Brady and Scalise both say that the final compromise bill will include the House SALT provision.

“We have a lot of good members who are for this bill only because we addressed and fixed the SALT problem,” Scalise said. “No knock on [the Senate] bill, but it’s not something they had to focus on, and it will have to be in a final product.”

But Democrats, who have railed against the bill’s benefits for corporations and the wealthy, warned that dozens of Republican members would pay the price if the deduction was modified at all.

“Democrat or Republican, they just basically said ‘drop dead’ to the northeast and west coast,” said Rep. John B. Larson (D-Conn.), a senior member of the Ways and Means Committee.

No Democrats are expected to support the House bill. The leaders of the moderate Blue Dog Caucus, who had previously signaled a willingness to work with Republicans on a tax plan, said Wednesday said the group “simply cannot support a bill that, by every kind of measurement, has been determined to add over $2 trillion to the deficit at the expense of middle-class Americans.”

“We are not convinced that the middle class gets a fair shake when it comes to the deductions that have been eliminated, where the tax brackets are set, and whether and where jobs will be created,” said the joint statement from Reps. Jim Costa (D-Calif.), Henry Cuellar (D-Tex.), and Daniel Lipinski (D-Ill.).

— Ed O’Keefe contributed to this report.



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