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House OKs sweeping tax code reform after Trump rallies GOP

Updated November 16, 2017 - 6:10 pm

WASHINGTON — President Donald Trump rallied House Republicans to pass a sweeping reform of the tax code on Thursday while a Senate version that eliminates an Obamacare mandate faced growing doubts.

The House voted 227-205 to pass its tax cut package after Trump met with Republicans in a closed-door caucus meeting at the Capitol. No Democrats voted for the bill.

“This is about giving hardworking taxpayers bigger paychecks, more take-home pay,” said House Speaker Paul Ryan, R-Wis. “It’s about getting this economy to grow faster, so we get better wages, more jobs and we put America in the driver’s seat in the global economy once again.”

But House Minority Leader Nancy Pelosi, D-Calif., called the bill “the GOP tax scam” that would saddle future generations with debt.

Democrats charged that big business and the wealthiest Americans would get the largest tax breaks while middle-class families would get pocket change.

“This bill is a shameless giveaway for special interests and corporations that leaves ordinary Americans empty-handed,” said Rep. Ruben Kihuen, D-Nev.

The House Tax Cuts and Jobs Act would provide a deep corporate tax cut, lowering the rate from 35 percent to 20 percent.

It would cost $1.5 trillion over 10 years.

Trump applauds vote

Trump has called on Congress to slash corporate tax rates to spur economic growth and create jobs as the economy slowly rebounds from the Great Recession.

The president wants to sign a tax reform bill into law by Christmas, providing him his first major legislative victory since he took office Jan. 20.

White House spokeswoman Sarah Sanders said the president applauds the House vote.

“A simple, fair, and competitive tax code will be rocket fuel for our economy, and it’s within our reach,” Sanders said. “Now is the time to deliver.”

But hurdles remain in the Senate where the Finance Committee is crafting its version of the bill and has included repeal of the individual mandate in the Affordable Care Act that requires people to purchase insurance or face IRS penalty.

Roundly applauded by Republicans who say the Obamacare mandate burdens working-class Americans, Democrats called the measure an end-around effort to defund the health-care system that would result in a cut of federal subsidies for low-income families.

Sen. Orrin Hatch, R-Utah, the chairman of the committee, tucked the Obamacare individual mandate repeal into the Senate bill at the urging of Trump. Hatch defended the move saying 80 percent of Americans who paid the tax penalty for no insurance made less than $50,000.

The move was supported by Sen. Dean Heller, R-Nev., who said Nevadans would benefit from eliminating the mandate.

A Congressional Budget Office analysis found repeal of the mandate would result in 13 million fewer Americans with health insurance in 2027. The repeal would also increase insurance premiums by 10 percent.

Sen. Susan Collins, R-Maine, questioned the political and policy rationale of linking tax reform and health care in the bill.

Collins was one of three Republicans who voted against a Senate repeal of Obamacare earlier this year, handing GOP leaders and Trump an embarrassing loss.

Although Collins has not revealed how she will vote on tax reform, her vote is considered crucial. Sen. Ron Johnson, R-Wis., said this week he would vote against the Senate bill in its current form because it gives more to corporations than local businesses that provide jobs.

Sen. Jeff Flake, R-Ariz., criticized the Senate and House bills because they would add $1.5 trillion to the national debt over 10 years.

The Republican-controlled House and Senate are using special budget rules to pass the legislation with simple majorities. The GOP has a slim 52-48 majority in the Senate and can afford to lose only two votes to pass the bill with Vice President Mike Pence casting a tie-breaking vote.

House bill’s provisions

The House bill did not include repeal of the Obamacare mandate. Instead, it offset the corporate tax break with the elimination of deductions, including the state and local income tax deduction, student loan interest, medical expenses and tax credits for solar and geothermal energy.

Home mortgage interest deductions would be capped at $500,000, down from $1 million.

Rep. Kevin Brady, R-Texas, the architect of the House tax package, said the bill simplifies the tax code and creates new income tax rates, and doubles the standard deduction to provide middle-class families a net tax cut.

But Rep. Dina Titus, D-Nev., said people should ignore GOP rhetoric about “trickle-down economics” and cuts due to new tax brackets created by the plan.

“Thirty-six million middle-class Americans will see a tax hike in this bill,” said Titus, who represents Las Vegas. “Thousands of them live in my district.”

Rep. Jacky Rosen, D-Nev., submitted amendments to negate the repeal of six deductions she said were important to middle-class Nevadans. None were accepted by the GOP leaders who muscled the bill through with no votes from Democrats.

“House Republicans voted today to throw millions of working families under the bus so they could give wealthy Americans and big corporations a tax cut,” Rosen said.

Thirteen Republicans voted against the bill, mostly those from high-tax states in the Northeast who claim eliminating the state and local income tax deduction equated to a tax hike.

Nevada does not levy a state income tax.

Rep. Mark Amodei, R-Nev., who voted for the bill, said Nevadans would still be able to deduct mortgage interest and property taxes, and benefit from new tax brackets and a doubling of the standard deduction to $12,000.

The National Federation of Independent Business opposed the first draft of the House bill but backed the version passed Thursday after tweaks to provide a larger tax cut to small businesses.

Amodei said “Main Street job creators” would see tax rates reduced by lowering the maximum tax rate on business income to no more than 25 percent.

In the Senate, Heller has tucked language into the bill that would double the child tax credit, as well as an amendment that would allow startups and small businesses to award stock options to employees.

The Senate bill also would protect the status of tax-exempt bonds, which are being used to finance the $1.9 billion Las Vegas Raiders stadium project. The House bill would eliminate the tax-exempt status of bonds.

Differences in the two pieces of legislation would be ironed out in a House-Senate conference committee.

Contact Gary Martin at gmartin@reviewjournal.com or 202-662-7390. Follow @garymartindc on Twitter.

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