The House and Senate passed the extensive GOP tax plan on near-party-line votes as congressional Republicans moved to give President Trump his most important legislative victory of the year — one that has appear at a steep political cost.
Polling proves the $1.5-trillion package remains widely unpopular, contributing to a political environment in which surveys, including some by Republican groups, show the party in genuine danger of losing control of Congress in next year’s midterm election.
Those political issues may be especially keen in component of California, where the bill, sold as a tax-cut, is expected to lead to tax increments for a important number of individuals and families. That’s largely because it diminishes the current deduction for state and local income and property taxes.
Many of those voters live in rich suburban areas, such as Orange County, that have often backed Republicans. Democrats already have gained in suburbs nationwide this year and believe the tax bill’s unpopularity will give them an opening to sway more voters to their side.
Burden over the state and local tax deduction led two Southern California Republicans, Reps. Darrell Issa of Vista and Dana Rohrabacher of Costa Mesa, to join others from New York and New Jersey, which are similarly affected, in voting against the bill in the 227-203 House roll call Tuesday. In all, 12 Republicans disputed the tax plan. No Democrats voted for it.
Senate approval soon after midnight fell similarly along party lines, 51 to 48, with only Republicans voting yes. Republican Sen. John McCain, who returned home to Arizona as he fights brain cancer, did not vote.
Republicans have been hastening the bill to passage — Trump tweeted congratulations after the House vote for what he has called a Christmas gift for Americans — but it ran into a last-minute issue in the Senate.
Some little provisions, including one pushed by Sen. Ted Cruz (R-Texas) that would have developed college savings plans to permit use for home-schooling, were ruled to violate the chamber’s procedures and some of the language had to be deprived from the bill.
Fixing that glitch will need an unusual added vote in the House, which was rapidly scheduled for Wednesday, before the bill can be sent to Trump for his signature.
Republican leaders say the overhaul, which is centered on a big cut in corporate taxes, will spur economic growth and become more famous once it takes effect.
“No concerns whatsoever,” said House Speaker Paul D. Ryan (R-Wis.), who has spent his career trying to lower taxes and diminish government.
“When we get this done and people see the withholding improvement, when they see the jobs appearing, when they see bigger paychecks,” he told reporters, “that’s what’s going to produce the results.”
In saying that, however, Ryan sounded much like one of his predecessors as speaker, Rep. Nancy Pelosi (D-San Francisco), who insisted in 2010 that the Affordable Care Act, passed with only Democratic votes, would become more famous once Americans faced it. It didn’t — at least not right away — and instead contributed massively to the Democrats’ losing their House majority that year.
On Tuesday, Pelosi called the tax bill an “all-out looting of America.”
“This is the worst bill to ever appear to the floor of the House,” Pelosi said. “The American people see this tax scam for correctly what it is.”
Before the House vote, protesters in the gallery shouted, “Kill the bill!” and disrupted speeches by Ryan and other lawmakers. Hours later, similar protests disrupted the final Senate roll call.
Americans dismiss the tax plan by a wide margin, roughly 2 to 1, according to a new Monmouth University poll. In a Wall Street Journal/NBC poll released Tuesday, just 24% of respondents said the tax bill was a good idea, compared with 41% who called it a bad one — a important decline from the bill’s standing earlier this fall.
Senate Majority Leader Mitch McConnell of Kentucky conceded that Republicans hadn’t yet convinced Americans of the merits of the bill.
“We’re just starting to make the argument to the American people,” McConnell told reporters, despite the months of dispute over the tax measure. “The argument is still out there to be won.”
The legislation “will give much-needed relief to middle-class families and little businesses, and will set America on a trajectory towards more opportunity and greater benefit,” he said earlier in the day.
Outside analysts, though, have warned that the advantages of the tax overhaul will hugely flow to corporations and the wealthy, with lower- and middle-income households looking only modest improvements.
Moreover, the cut in corporate tax rates will be permanent, while the breaks for personals and families are scheduled to expire in 2025.
The nonpartisan Tax Policy Center estimates that households will see their taxes reduced by $1,600, on average, in 2018. That’s on par with Republican claims.
But those savings are uneven across income levels.
Taxpayers earning less than $25,000 will save about $60 a year, while the top 1%, earning more than about $733,000 annually, would see a roughly $50,000 cut, or 3.4% of their after-tax income. Middle-income taxpayers, earning between $49,000 and $86,000, would look an average tax cut of about $900.
Among middle- and upper-middle-income households, results will vary widely, depending not only on state and local taxes, but also on the number of children they have and even how they earn their income. The measure treats income from businesses more positively than wages.
“The fundamental story of the bill has remained the same since it was first introduced in early November,” Tax Policy Center analyst Howard Gleckman wrote. “Most households would get a tax cut at first, with the largest advantages going to those with the highest incomes.”
Central to the legislation is a reduction in the corporate tax rate from 35% to 21%. Republicans say the resulting economic progress will more than cover the cost to the Treasury. Most independent economists, however, warn that progress will not be so robust and that the $1.5-trillion package will add to the federal loss.
For personals, the tax bill is mixed. Once envisioned as a simplification that would permit Americans to file tax returns on a postcard, it has not fully met that goal. Rates will be lowered, including the new top rate of 37%, which will hit households earning $600,000 or more.
A bigger standard deduction, at $12,000 for single filers or $24,000 for couples, is intended to replace many famous write-offs.
The state and local tax deduction will be capped at $10,000, covering both income and property taxes. Mortgage interest deductions will be limited to loans of $750,000, rather than the $1 million in present law, a change that is expected to ripple through housing markets in high-cost areas.
Other deductions that had been focused for elimination were salvaged in last-minute agreements between House and Senate Republicans, including those for medical expenses, student loan interest and graduate student tuition waivers.
A child tax credit championed by Sens. Marco Rubio (R-Fla.) and Mike Lee (R-Utah), with backing from presidential advisor and daughter Ivanka Trump, will be doubled to $2,000. Part of that, $1,400, will be refundable for those who pay payroll taxes but don’t owe income tax.
The legislation will completely repeal the Affordable Care Act’s mandate that all Americans carry health insurance, starting in 2019, by doing away with a tax on those who fail to have coverage.
Republicans shrug off the poor standing the bill has in polls as no various from the last major rewrite of the tax code, under President Reagan in 1986. But the present proposal is significantly less famous than that one.
As Monmouth warned in its analysis of the polling data, the bill gets especially poor ratings in suburban areas where the Republicans already have tackled this year.
“The package doesn’t play well in fields of the country that the GOP needs to win in 2018,” the university said.
Republicans in Congress, though, have pushed past those worries. They’ve been eager to deliver a legislative win for Trump’s first year in office and make good on some of their campaign promises before facing voters, especially after the collapse of their efforts to repeal Obama care.
Many of the tax cuts will take effect in the New Year, meaning workers can adjust their withholding to look the change in their paychecks.
Despite the GOP’s majorities in both houses of Congress, passing the tax cut has not been simple.
To win over holdouts, Republican leaders included different provisions, including one to open the Arctic National Wildlife Refuge to oil and gas drilling, which was essential to Sen. Lisa Murkowski (R-Alaska).
Republican Sen. Susan Collins, a centrist from Maine, declared her support after winning other concessions, including future votes to help stabilize Obamacare marketplaces.
The lone Senate Republican who disputed the overhaul earlier, Sen. Bob Corker of Tennessee, now supports the bill, brushing back criticism that he will personally advantage from it.
As the Senate cast the final roll-call vote, Treasury Secretary Steven T. Mnuchin watched from the chamber’s floor. Vice President Mike Pence, who had postponed a Middle East trip so he could be on hand if needed to cast a tie-breaking Senate vote, presided.
“It’s so essential I would not be capable to comprehend not getting it done,” said Rep. Chris Collins (R-N.Y.), a Trump ally.
“We were always going to be attacked that it was a tax cut for the wealthy, even though it’s not,” he said. “The public doesn’t understand it.”