WASHINGTON -- House Republicans on Thursday passed legislation that would overhaul the U.S. tax code, a crucial step forward in the GOP's effort to enact the centerpiece of President Donald Trump's economic agenda.
The bill passed mostly along party lines, with 227 votes in favor and 205 against. Thirteen Republicans voted against the bill. No Democrats voted for it.
Late Thursday, the Senate bill was approved by the Finance Committee and sent to the full Senate on a party-line 14-12 vote.
Trump and Republican leaders in Congress aim to pass legislation by year's end that would simplify the code and deliver $1.5 trillion in tax cuts over a decade. Both the House and Senate bills deliver the majority of the cuts to corporations and wealthy Americans, but there are significant differences between the bills that will have to be resolved.
Passing the bill is a key victory for House leaders, including Speaker Paul Ryan, R-Wis., who have long asserted that cutting taxes on the wealthy and businesses will spur economic growth that benefits all Americans.
"Passing this bill is the single biggest thing we can do to grow the economy, to restore opportunity and help those middle-income families who are struggling," Ryan said.
Trump visited House Republicans personally on Thursday to urge support for the bill, leaving them, according to multiple people at the private meeting, with a concise closing message: "I love you. Now go vote."
Even before the vote, GOP leaders were confident that the pep talk wasn't necessary. Fewer than a dozen of the 240 House Republicans said they opposed the bill or had lodged strong objections as of Wednesday morning. The GOP could have lost up to 22 votes and still passed the bill Thursday.
"There's not a lot of minds to change in there," said Rep. Tom Cole, R-Okla.
Cole said Trump's remarks were upbeat and packed with one-liners and that the president did not include the type of threats he delivered when he visited lawmakers ahead of a crucial health care vote.
Trump thanked party leaders, expressed optimism about the Senate bill and said he believed that Congress ought to move to "welfare reform" after completing the tax bill, according to several members in the room who spoke on the condition of anonymity to discuss the private meeting.
He also mentioned his trip to Asia, including his efforts to free several University of California, Los Angeles, basketball players accused of shoplifting in China, the members said.
On Wednesday, House Majority Whip Steve Scalise, R-La., said 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.
Yet House Republicans voted on the bill with key questions unanswered, especially concerning the national debt as tax cuts lose the country revenue.
Trump and GOP leaders have long claimed their plan will create economic growth that will offset the bill's $1.5 trillion revenue cut, negating any long-term impact on the debt.
House Ways and Means Committee Chairman Kevin Brady, R-Texas, 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 nor the Trump administration had released any analysis showing whether the Republicans' economic claims are viable.
One study of an earlier iteration of the House bill, by the conservative-leaning Tax Foundation, found that it would indeed create 890,000 jobs and marginally increase wages and growth over the long term. But that would offset only a part 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 because of a lowering of individual tax rates, the near-doubling of the standard deduction and a larger child tax credit.
But many households that itemize their deductions -- taking advantage of write-offs for state income taxes, medical expenses, and more -- could see immediate tax increases. In the coming years, the benefits of the bill for individuals wane because of the phaseout of key tax credits and the use of a slower measure of inflation to recalibrate bracket levels.
The party's tax plan faces an uncertain future in the Senate, where Republican leaders, working with a slimmer majority than in the House, are struggling to find enough support for their bill.
Multiple Republicans have expressed reservations about the Senate plan, which would permanently reduce the corporate tax rate but allow cuts for households and individuals to expire. The plan would also repeal the Patient Protection and Affordable Care Act's individual mandate to purchase health insurance, a difference from the House plan that gives Senate leaders more revenue to work with but would undermine a system aimed at providing health coverage to millions of Americans.
The Joint Committee on Taxation dealt the Senate an additional setback Thursday when it concluded the bill would, by the end of a decade, raise the average tax burden for households making less than $75,000 a year. Much of the hit to poor and working-class Americans would stem from the changes to the health care law, as many would no longer get subsidies to help them afford health insurance because they would give up on buying it altogether, the joint committee reported.
"This morning, people across the country are waking up to confirmation that this bill pays for massive handouts to corporations with a multibillion-dollar tax hike on people who can't afford it," said Sen. Ron Wyden of Oregon, the top Democrat on the Senate Finance Committee, referring to the joint committee's analysis.
The Senate bill also takes a considerably different approach to the taxation of multinational corporations, as it 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 insist those individual tax cuts will eventually be extended by a future Congress.
Still, after the Finance Committee's approval, Senate Majority Leader Mitch McConnell declared, "For the millions of hard-working Americans who need more money in their pockets and the chance of a better future, help is on the way."
13% TAX RISE BY 2021
The Joint Committee on Taxation's Thursday report additionally showed that, by 2021, the Senate tax bill would lead to a 13 percent tax increase on Americans making between $20,000 and $30,000 per year. Meanwhile, those earning from $500,000 to $1 million would see the biggest cut in taxes -- 8.5 percent -- by 2021, according to the joint committee's analysis.
The hit to the $20,000 to $30,000 cohort complicates the Republican message of widespread tax relief for working Americans. Other recent studies affirm that plenty of benefits would go to the highest earners and some middle-class taxpayers might actually pay more. Ryan and McConnell have walked back guarantees that no one in the middle class would see a tax increase under their plans.
"You've targeted the relief to help the wealthy, and the middle-income families are going to get stuck with it," said Sen. Benjamin Cardin, D-Md.
The Senate bill could still change drastically, especially with key Republican senators balking and the GOP holding only a two-vote Senate majority.
Sen. Ron Johnson, R-Wis., said Wednesday that 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 of Tennessee, John McCain of Arizona and Lisa Murkowski of Alaska, have yet to declare their support for the bill.
The Senate Finance Committee on Thursday continued a multiday meeting to debate and amend the bill.
Republicans on the panel were able to block numerous amendments by Democrats that sought to change how the tax cuts would be delivered. One amendment, offered by Wyden, would make tax cuts for individuals permanent and make tax cuts for corporations temporary. The bill currently makes tax cuts for companies permanent and forces tax cuts for individuals to expire in 2026.
But Wyden's amendment was defeated by a party-line 14-12 vote, with Senate Finance Committee Chairman Orrin Hatch, R-Utah, accusing Wyden of trying to put a "poison pill" in the bill by cutting the corporate changes short. Hatch said he would allow Democrats to make the tax cuts for individuals permanent only if it doesn't affect the corporate tax cuts. This would add hundreds of billions of dollars to the debt.
Information for this article was contributed by Mike DeBonis, Damian Paletta and Ed O'Keefe of The Washington Post; by Alan Fram, Marcy Gordon, Kevin Freking, Richard Lardner and Matthew Daly of The Associated Press; by Billy House, Laura Litvan, Erik Wasson, Sahil Kapur and Colleen Murphy of Bloomberg News; and by Thomas Kaplan and Alan Rappeport of The New York Times.
With House Sergeant at Arms Paul Irving leading the way, President Donald Trump and Vice President Mike Pence leave the Capitol on Thursday after meeting with House Republicans and urging them to approve their tax overhaul bill. “I love you. Now go vote,” Trump said at the end of the meeting.
A Section on 11/17/2017
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