Republicans rammed a near $1.5 trillion package overhauling corporate and personal taxes through the House on Thursday, edging President 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 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.
"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," said House Speaker Paul Ryan.
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, 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.
Both the House and Senate versions of the legislation would cut the 35% corporate tax rate to 20%, 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 and his family could save more than $1 billion under the proposal.)
"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 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.
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 subsidised 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 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 Sen. Ron Johnson became the first Republican to say he opposed the GOP bill, complaining that it left taxes too high on some corporations and partnerships.
Besides Johnson, Sens. Susan Collins, Jeff Flake, John McCain, Bob Corker, 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%. The Senate would have seven rates: 10%, 12%, 23%, 24%, 32%, 35%, and 38.5%.
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.