House approves Trump's massive tax overhaul, but last-minute glitch delays final passage

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After months of debate, Congress has released a final tax reform bill. The bill eliminates some personal exemptions while increasing the standard deduction.
USA TODAY

WASHINGTON — House Republicans on Tuesday passed the most significant overhaul of the tax code in three decades, but the bill hit a late-afternoon glitch when the Senate parliamentarian ruled that three minor provisions in the bill did not comply with strict budget rules and would have to be stripped out. 

That means the Senate will likely vote on a revised bill Tuesday night, forcing the House to vote again Wednesday on the tweaked tax package before Republicans can claim their first major legislative win and deliver the $1.5 trillion package to President Trump before Christmas, as he requested.

Senate Republicans are using special budget rules to fast-track the tax bill and block a Democratic filibuster. But those rules mandate that every element of the bill has to have a budgetary impact. The Democrats asked the Senate parliamentarian to scour the bill for problematic provisions, and she found three — all relatively minor items.

One provision would allow 529 college savings accounts to be used for home-schooling expenses. Another sets criteria to determine if private universities’ endowments will be subject to a new excise tax. The third is even more mundane: the short title of the bill — “The Tax Cuts and Jobs Act” — has no budgetary impact and will have to be nixed.

Tuesday’s 227-to-203 vote in the House to pas the bill split mostly along party lines and came after a brief but heated debate, which was interrupted several times by protesters chanting “Kill the bill! Kill the bill!” before being escorted from the House gallery. 

During the floor debate, Republicans touted the tax bill as an engine for economic growth and a boost for middle-class families, while Democrats blasted it as a sop to big corporations and wealthy donors. Twelve House Republicans joined all the chamber’s Democrats to oppose the bill.

The measure is expected to squeak through the Senate with a narrow GOP majority on Tuesday evening, and the House will vote again Wednesday.

“This is a once in a generation opportunity,” said Senate Majority Leader Mitch McConnell, R-Ky.

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House Ways and Means Committee Chairman Kevin Brady, R-Texas, is joined by Speaker of the House Paul Ryan, R-W.I., Rep. Cathy McMorris Rodgers, R-W.A., Majority Whip Steve Scalise, R-L.A., and Majority Leader Kevin McCarthy, R- Calif., as they talk to reporters following passage of the Tax Cuts and Jobs Act in the Will Rogers Corridor at the Capitol Dec. 19, 2017, in Washington, DC. The House passed the tax cut legislation 227-203. 
Chip Somodevilla, Getty Images
Speaker of the House Paul Ryan, center, R-W.I., pats House Ways and Means Committee Chairman Rep. Kevin Brady, left, R-Texas, on the back after the House passed tax reform legislation, Tuesday. Cathy McMorris Rodgers, R-Wash., right, looks on.
Celebration will have to wait, however. The bill hit a late-afternoon glitch in the Senate when the parliamentarian ruled that three minor provisions in the GOP bill did not comply with strict budget rules and would have to be stripped out. 
Brendan Smialowski, AFP/Getty Images

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It was also a years-in-the-making moment for House Speaker Paul Ryan, R-Wis., who has spent nearly 20 years advocating for tax reform. Ryan took the rare opportunity to preside over the chamber for the vote, banging the gavel and joyfully reading the final vote total, as his Republican colleagues erupted in cheers.

“This is profound change and this is change that is going to put our country on the right path,” Ryan said at a news conference after the House vote. “On January 1, Americans are going to wake up with a new tax code.”

The centerpiece of the GOP bill is a permanent 40% tax cut for corporations, a change Republicans say is long overdue and desperately needed to make America more competitive in the global economy. Smaller businesses will also see their tax burden shrink significantly.

Supporters said the cost of reducing tax collections by $1.5 trillion over the next 10 years would be offset by an explosion of economic growth, but economists said at best that growth will cover one-third of the cost. Non-partisan estimates project the tax bill could add $1 trillion to the national debt over 10 years. And laws designed to prevent deficit spending could kick in as early as next year, forcing cuts to popular programs, including Medicare.

The bill will also lower tax rates for individuals and families temporarily, while increasing the standard deduction and the child tax credit. But because the bill also kills or limits key tax deductions — most notably rolling back the ability of individuals to subtract their state and local taxes from their federal tax bill — the impact on individuals will vary. 

In a study released on Monday, the Tax Policy Center, a nonpartisan think tank often cited by Democrats, concluded that the top 1% of taxpayers, those making more than $732,800, would get 20.5% of all the benefits in the tax bill next year.

The study also found that for people in the middle of the national income scale — making between $48,600 and $86,100 — 91% will see a tax cut averaging $1,090, while 7% will see a tax increase averaging $910 next year.

“This GOP tax scam is simply theft — monumental, brazen theft from the American middle class and from every person who aspires to reach it,” House Minority Leader Nancy Pelosi, D-Calif., said during the House debate Tuesday. 

Other Democrats noted that the bill is projected to plump up the nation’s $20 trillion debt and cast the Republican bill as fiscally irresponsible.

 

I oppose this conference report with every bone in my body. This tax bill is a $2.3 trillion holiday gift for Wall Street, the rich, and the wealthy. Conceived in darkness and birthed with the help of donors and funders. This bill is not for the people. It is not tax reform.

— John Lewis (@repjohnlewis) December 19, 2017

“Who are they fooling with this bill?” Rep. Rosa DeLauro, D-Conn., said on the House floor. “This bill fails the middle class and benefits the richest 1 percent.”

Republicans dismissed suggestions that the bill was skewed toward the wealthy.

“With this tax reform, families at every income level will get a tax cut,” Ryan told reporters Tuesday. “This is real relief and people are going to see this in their paycheck before too long.”

Ryan said he had “no concerns whatsoever” that the tax bill would turn into a political liability for the GOP as they head into the 2018 elections.

The tax plan has been deeply unpopular, according to numerous national polls. A Monmouth University Poll released on Monday, for example, found that Americans disapproved of the GOP bill by a nearly 2-to-1 margin; only 26% of respondents said they approved of the plan, while 47% said they didn’t like it.

Ryan said public opinion will shift once Americans start seeing bigger paychecks and more jobs.

Democrats said the opposite would happen.

“This bill will be an anchor around the ankles of every Republican,“ Senate Minority Leader Charles Schumer, D-N.Y., said Tuesday. “It so helps the wealthy and the powerful corporations, it does so little, and even hurts many in the middle class, it’s a loser. … Republicans will rue the day that they passed this tax bill.”

The GOP legislation also strikes a major blow against the 2010 Affordable Care Act; it repeals that law’s “individual mandate” requiring most Americans to obtain health insurance. 

Republicans added that provision because it will save the federal government about $381 billion between 2018 and 2026, most of that from a decrease in Medicaid spending, according to a report from the nonpartisan Congressional Budget Office.

Democrats blasted that as an assault on low-income Americans who rely on Medicaid for their health insurance. They point to the CBO’s analysis finding a repeal would lead to 4 million fewer people with insurance next year, 13 million fewer in 2027, and premium rate increases of about 10% for those who remain in the exchanges. 

Republicans failed several times this year to pass legislation to repeal and replace Obamacare, but adding this provision to the tax bill gives them a partial success to tout on that long-standing promise.

Contributing: Herb Jackson

Read more: 

How soon after President Trump signs the tax bill could you see the effects?

Here’s what’s in the final tax bill Republicans plan to send to President Trump next week

Republicans appear to lock down key Senate votes for tax overhaul bill

 

 

 

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