WASHINGTON (AP) — Republicans rammed a near $1.5 trillion package overhauling corporate and personal taxes through the House on Thursday, edging President Donald Trump and the GOP toward their first big legislative triumph in a year in which they and their voters expected much more.
The near party-line 227-205 vote came as Democrats on the other side of the Capitol pointed to new estimates showing the Senate version of the plan would boost future taxes on lower and middle-income Americans. Those projections, coupled with complaints by some GOP senators about their chamber’s proposal, suggest party leaders still face a challenge in crafting a measure that can make it through Congress over solid Democratic opposition.
House passage raised GOP hopes that Trump would be able to claim a big victory in a year highlighted so far by the Senate crash of the party’s effort to repeal President Barack Obama’s health care law. The first major tax rewrite in three decades has been a career-long goal of countless Republicans politicians, who tout the reductions as a boon to families, businesses and the entire economy.
“For the first time in decades we are able to provide the American people with a dramatic new tax code that is simple and fair. Utahans deserve more jobs, fairer taxes and bigger paychecks,” Rep. Chris Stewart, R-Utah, said in a post on his Facebook page. “An average family of four living in Utah’s 2nd Congressional District will receive a $1,445 tax cut.
“The majority are also going to be able to complete their taxes on a postcard sized tax form. The standard deduction is going to increase significantly, keeping more money in your pocket. The child tax credit will increase, providing you with more support for your family. Tax benefits are being preserved, helping you afford some of life’s most important investments.”
Thirteen Republicans — all but one from high-tax California, New York and New Jersey — voted “no” because the plan would erase tax deductions for state and local income and sales taxes and limit property tax deductions to $10,000. Defectors included House Appropriations Committee Chairman Rodney Frelinghuysen, R-N.J., who said the measure would “hurt New Jersey families.”
Democrats derided the plan as a scheme to help the rich but do little for others.
“Republicans have brought forth a bill that is pillaging the middle class to pad the pockets of the wealthiest and hand tax breaks to corporations shipping jobs out of America,” declared House Minority Leader Nancy Pelosi of California.
Both the House and Senate versions of the legislation would cut the 35 percent corporate tax rate to 20 percent, while reducing some personal taxpayers’ rates and erasing and shrinking deductions for individuals. Projected federal deficits would grow by $1.5 trillion over the coming decade.
Before the vote, Trump urged House Republicans at the Capitol to approve the bill, though it was clear beforehand that they had the votes.
“He told us that we have this once-in-a lifetime opportunity to do something really bold, and he reminded us that is why we seek these offices,” Rep. Steve Womack of Arkansas said of the closed-door rally.
While House Republicans celebrated, the news was less encouraging for the version making its way through the Senate Finance Committee.
New numbers from Congress’ Joint Committee on Taxation showed that beginning in 2021, many families earning under $30,000 annually would face higher taxes under the Senate package. By 2027, families making less than $75,000 would face tax boosts while those making more would enjoy lower levies.
Oregon Sen. Ron Wyden, top Democrat on the Finance panel, said the projections showed the Senate bill was “just shameful” because middle-class families would “get hammered.”
Republicans attributed the new figures to two Senate provisions.
One would end the measure’s personal tax cuts starting in 2026, a step GOP leaders took to contain the measure’s costs. The other would abolish the “Obamacare” requirement that people buy health coverage or pay tax penalties.
Eliminating those fines is expected to mean fewer people would obtain federally subsidized policies, and the tax analysts consider a reduction in those subsidies to count as a tax increase. The nonpartisan Congressional Budget Office has projected that would result in 13 million more uninsured people by 2027, making the provision a political risk for some lawmakers.
Republicans on the Finance panel showed no signs of backing down. Sen. John Thune, R-S.D., argued that the same Taxation Committee tables showed that higher earners were still bearing a large share of the overall tax burden.
The figures were released a day after Ron Johnson of Wisconsin became the first Republican senator to say he opposed the GOP bill, complaining that it left taxes too high on some corporations and partnerships.
Besides Johnson, Republican Sens. Susan Collins of Maine, Jeff Flake and John McCain of Arizona, Bob Corker of Tennessee and Lisa Murkowski have yet to commit to backing the tax measure.
Republicans controlling the Senate 52-48 can approve the legislation with just 50 votes, plus tie-breaking support from Vice President Mike Pence. With solid Democratic opposition likely, that means they can lose just two GOP votes — a precarious figure.
Halting tax cuts for individuals in 2026, derided as a gimmick by Democrats, is designed to pare the bill’s long-term costs to the Treasury. Legislation cannot boost budget deficits after 10 years if it is to qualify for Senate procedures barring bill-killing filibusters.
The House measure would collapse today’s seven personal income-tax rates into four: 12, 25, 35 and 39.6 percent. The Senate would have seven rates: 10, 12, 23, 24, 32, 35 and 38.5 percent.
Both bills would nearly double the standard deduction to around $12,000 for individuals and about $24,000 for married couples and dramatically boost the current $1,000 per-child tax credit.
Each plan also would erase the current $4,050 personal exemption and annul or reduce other tax breaks. The House would limit interest deductions to $500,000 in the value of future home mortgages, down from today’s $1 million, while the Senate would end deductions for moving expenses and tax preparation.
Each measure would repeal the alternative minimum tax paid by higher-earning people. The House measure would reduce and ultimately repeal the tax paid on the largest inheritances, while the Senate would limit that levy to fewer estates.
Written by ALAN FRAM and MARCY GORDON, Associated Press
Associated Press writers Kevin Freking, Richard Lardner and Matthew Daly contributed to this report.
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Twitter: @STGnews
Copyright 2017 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Stewart is a total liar!!!!!! This tax bill will cost anyone making under $75,000 a year more in taxes.
Many millions in the middle class will pay more taxes under the House and Senate bills. Eliminating all the deductions—have they even considered the impact to homeowners, teachers, those with student loans, etc? At the macro level–the housing market, our educational system, state and local budgets?
They fail to mention the elimination of the individual exemptions which can negate much of the increase in the standard deduction.
And the reduction in tax rates sunset in 10 years but our deductions are permanently eliminated.
This is a scam against the middle class, who will be hit with increased taxes.
This is not the tax reform, the tax relief we were promised. This is redistribution and social engineering, all for political gain.
If passed, the resulting bill could be catastrophic for the GOP. They are so detached from the American people.
Your Representative Stewart continues his policy of just “saying what they tell me”. As a former B-1 bomber pilot, you have to believe he has the critical thinking skills to understand the Joint Committee on Taxation’s findings, however, he ignores the facts and merely spews party talking points. He has become a reliable party-line guy……..
Not that Rep. Stewart is any different from the rest of the Utah delegation who do what they are told. Their constituents are unlikely to understand the facts, and more importantly, the irresponsible tax revenue giveaway to corporations and wealthy individuals. The big donors get what they wanted, and the taxpayers will be burdened with added debt payments for years to come. Let’s see if the Senate has the courage to challenge the underlying falsehoods in their version……
America’s Corporations have enjoyed exceptionally low interest rates for borrowing for almost a decade, and their record profitability is reflected in the stock indicies. Even if the tax code wipes out a number of the special interest exemptions and deductions for corporations while it does reduce the effective tax rate to 20%, we will still be at a disadvantage compared to Ireland. Lower corporate tax revenues will result in stock buy-backs and other shareholder paybacks. There are few, if any companies, with a legitimate business model that are lacking potential investors. This is a “giveaway” plain and simple.