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House Is Poised to Pass Tax Bill in Major Step Toward Overhaul House Passes Tax Bill in Major Step Toward Overhaul
(about 1 hour later)
WASHINGTON — The House is poised on Thursday to pass a sweeping rewrite of the tax code along party lines, advancing a critical effort by Republicans to enact legislation that cuts taxes for corporations and individuals before the year’s end. WASHINGTON — The House passed a sweeping rewrite of the tax code on Thursday, taking a significant leap forward as Republicans seek to enact $1.5 trillion in tax cuts for businesses and individuals and deliver the first major legislative achievement of President Trump’s tenure.
The tax overhaul still faces significant obstacles, as Republicans must align the legislation that is expected to pass the House with a bill that is working its way through the Senate Finance Committee this week. The party is under pressure to get legislation to President Trump’s desk by Christmas, in part to show a significant legislative achievement from a Republican-controlled Congress during its first year in the majority. Lawmakers also want to push the legislation through quickly to avoid giving lobbyists and Democrats time to mobilize sufficient opposition. The House voted to 227 to 205 to approve the bill, shortly after Mr. Trump came to Capitol Hill to address House Republicans.
The House tax bill, which passed in the Ways and Means Committee last week, would cut taxes more than $1.4 trillion over 10 years. It cuts the corporate tax rate to 20 percent from 35 percent, collapses the tax brackets to four from seven, switches the United States to an international tax system that is more in line with the rest of the world and scales back many popular deductions, including one for state and local taxes paid. Thirteen Republicans voted against the bill, and zero Democrats voted for it. The Republicans who voted no were from New York, New Jersey, California and North Carolina.
The House bill appeared on track for passage on Thursday, despite some Republican opposition. If all House members vote and every Democrat opposes the bill, Republican leaders can afford to lose no more than 22 of their members for it to pass. The tax overhaul still faces significant obstacles, as Republicans must align the House legislation with a bill that is working its way through the Senate Finance Committee this week and contains big differences that will have to be bridged.
The biggest threat comes from Republicans in high-tax states like New York and New Jersey, who have fought to preserve the deduction for state and local taxes. The bill allows the deduction of up to $10,000 in property taxes, but that provision has not been enough to win over a number of House Republicans. Republicans are under pressure to get legislation to Mr. Trump’s desk by Christmas, especially after failing in their attempt to dismantle the Affordable Care Act this year, even though their party has full control of government. Lawmakers also want to push the legislation through quickly to avoid giving lobbyists and Democrats time to mobilize.
At least five Republicans from New York and three from New Jersey have come out against the bill. Republican leaders could also lose votes from at least a few of their members from California, another high-tax state. Republicans do not wish to witness a replay of their health care catastrophe, during which the House managed to pass a repeal bill in May, but the narrowly divided Senate could never do so.
Representative Kevin Brady, Republican of Texas and the chairman of the Ways and Means Committee, said this week that he was confident that Republicans had the votes to pass the bill. The House tax bill, which passed in the Ways and Means Committee last week, would cut taxes more than $1.4 trillion over 10 years. It cuts the corporate tax rate to 20 percent from 35 percent, collapses the number of tax brackets to four from seven, switches the United States to an international tax system that is more in line with the rest of the world, and eliminates or scales back many popular deductions, including one for state and local taxes paid.
The House is expected to begin floor debate at 9 a.m. on Thursday for about two hours. Mr. Trump is expected to make a visit to the Capitol to speak to the Republican conference around 11:30 a.m., according to a congressional aide. A vote is then expected to take place in the early afternoon. “For the first time in 31 years we are wiping the tax code clean and replacing it with one that is fairer and simpler for everyone,” said Representative Devin Nunes, Republican of California and a member of the Ways and Means Committee.
Despite concerns about some of the measures in the House bill, big business groups are largely on board. House Republican leaders were unable to win over a number of Republicans from high-tax states like New York and New Jersey, who have fought to preserve the deduction for state and local taxes. The House bill allows the deduction of up to $10,000 in property taxes, but that provision was not enough of a concession for them.
“Enacting tax reform would unleash resources for businesses large and small to hire new workers, expand facilities and purchase new equipment,” Suzanne P. Clark, the senior executive vice president of the United States Chamber of Commerce, wrote in a letter to House members on Wednesday that urged their support of the bill. At least five Republicans from New York and three from New Jersey had come out against the bill before Thursday’s vote.
As the House votes on Thursday, the Senate Finance Committee will hold another day of debate over its tax legislation, with a vote by the panel expected on Friday. If Republicans fall in line behind the bill, it could get a vote by the full Senate after Thanksgiving. “I just have too many constituents who are going to see their taxes go up,” said Representative Lee Zeldin, who represents a district on Long Island and was one of several New York Republicans who spoke out against the tax bill on Thursday morning. “You’re taking more money from a place like New York in order to pay for deeper tax cuts elsewhere,” Mr. Zeldin said.
Even with the dissent from the New York and New Jersey delegations, Representative Kevin Brady, Republican of Texas and the chairman of the Ways and Means Committee, said this week that he was confident that Republicans had the votes to pass the bill.
On Thursday, he made clear that the tax effort was far from over.
“The intent of our tax reform bill is to achieve tax relief for individuals at every income level in every state,” Mr. Brady said. “There are still some areas where we will and can make improvements.”
On the Senate side, the Finance Committee was holding another day of debate over its tax legislation, with a vote by the panel expected later this week. If Republicans fall in line behind the bill, it could get a vote by the full Senate after Thanksgiving.
But the Senate proposal faces an uncertain future, given the reservations of a handful of Republican senators. Republicans have a narrow 52-to-48 majority in the Senate, leaving them with little room for defections.
Adding to the uncertainty, Republican senators reopened the contentious debate over health care with a decision this week that as part of the tax overhaul, they would end the Affordable Care Act’s requirement that most people have health coverage or pay a penalty.
And a new analysis of the Senate bill by the congressional Joint Committee on Taxation could also complicate the bill’s trajectory. The committee said on Thursday that the legislation would raise taxes on lower-income families. Americans earning $30,000 or less would see their taxes increase beginning in 2021, if the Senate bill becomes law.
The committee also projected that Americans earning $75,000 or less would face large tax increases in 2027, after the individual tax cuts expire. When looking only at individual’s tax bills — and not the effects of corporate taxes on individual’s incomes — the committee said Americans at all income levels would see tax increases in 2027, compared to what they would have been if the Senate bill had not passed.
Senator Ron Wyden of Oregon, the ranking Democrat on the Finance Committee, called the development “astounding” and warned that middle-class taxpayers would get “clobbered” under the latest Republican plan.
“When you’re reaching for the cranberry sauce, Republicans are going be reaching for your pocketbooks to give handouts to multinational corporations,” Mr. Wyden said.
Senator Orrin Hatch of Utah, the Republican chairman of the Finance Committee, said that the appearance of a tax increase was a mirage that is the result of arcane scoring rules. Because people will no longer have to purchase health insurance, they may no longer receive tax credit subsidies for insurance that they do not purchase.
“Without those credits, they see an overall uptick in their tax liability,” Mr. Hatch said.
On Wednesday, Senator Ron Johnson, Republican of Wisconsin, became the first member of his conference to come out against the tax plan.
The votes of several other Republican senators, including Susan Collins of Maine and Bob Corker of Tennessee, are also far from assured.