Advertisement
  1. News

Tax bill's risks, rewards

WASHINGTON — With fanfare and a White House kickoff, House Republicans unfurled a broad tax-overhaul plan Thursday that would touch virtually all Americans and the economy's every corner, mingling sharply lower rates for corporations and reduced personal taxes for many with fewer deductions for home buyers and families with steep medical bills.

The measure, which would be the most extensive rewrite of the nation's tax code in three decades, is the product of a party that faces increasing pressure to produce a marquee legislative victory of some sort before next year's elections. GOP leaders touted the plan as a spark plug for the economy and a boon to the middle class and christened it the Tax Cuts and Jobs Act.

"We are working to give the American people a giant tax cut for Christmas," President Donald Trump said in the Oval Office. The measure, he said, "will also be tax reform, and it will create jobs."

It would also increase the national debt, a problem for some Republicans. And Democrats attacked the proposal as the GOP's latest bonanza for the rich, with a phaseout of the inheritance tax and repeal of the alternative minimum tax on the highest earners — certain to help Trump and members of his family and Cabinet, among others.

"If you're the wealthiest 1 percent, Republicans will give you the sun, the moon and the stars, all of that at the expense of the great middle class," said House Minority Leader Nancy Pelosi, D-Calif.

And there was enough discontent among Republicans and business groups to leave the legislation's fate uncertain in a journey through Congress that leaders hope will deposit a landmark bill on Trump's desk by year's end.

Sen. Marco Rubio, R-Fla., who was fighting for a doubling of the child tax credit he has aggressively pitched in recent weeks, was not happy with a plan to increase it by only $600.

Rubio wants the $1,000 credit to rise to at least $2,000.

On Twitter, Rubio said the House plan falls short of what advocates, including Trump, want.

"House #TaxReform plan is only starting point. But $600 #ChildTaxCredit increase doesn't achieve our & @potus goal of helping working families," he tweeted.

Underscoring problems ahead, some Republicans from high-tax Northeastern states expressed opposition to the measure's elimination of the deduction for state and local income taxes. Senate Finance Committee Chairman Orrin Hatch of Utah called the House measure "a great starting point" but said it would be "somewhat miraculous" if its corporate tax rate reduction to 20 percent — a major Trump goal — survived. His panel plans to produce its own tax package in the coming days.

The House Republicans' plan, which took months to craft in countless closed-door meetings, represents the first step in their effort to reverse what's been a politically disastrous year in Congress. Their drive to obliterate President Barack Obama's health care law crashed, and GOP lawmakers concede that if the tax measure collapses, their congressional majorities are at risk in next November's elections.

The package's tax reductions would outweigh its loophole closers by a massive $1.5 trillion over the coming decade. Many Republicans were willing to add that to the nation's soaring debt as a price for claiming a resounding tax victory. But it was likely to pose a problem for others.

Republicans must keep their plan's shortfall from spilling over that $1.5 trillion line or the measure will lose its protection against Democratic Senate filibusters, the bill-killing delays that take 60 votes to overcome. There are just 52 GOP senators, and unanimous Democratic opposition is likely.

Republicans said their plan would save $1,182 in taxes for a family of four earning $59,000, but features like phaseouts of some benefits suggest their taxes could grow in the future.

The U.S. Chamber of Commerce praised the measure but said "a lot of work remains to be done."

Led by Rep. Kevin Brady, R-Texas, chairman of the House Ways and Means Committee, the authors retained the deductibility of up to $10,000 in local property taxes in a bid to line up votes from Republicans from the Northeast. The panel planned to begin votes on the proposal Monday.

Brady said that the House plan had the "full support" of Trump and predicted that it would be on the president's desk this year. Anticipating the resistance from industry groups, Brady said, "We're going to prove them wrong once and for all."

Times Washington Bureau chief Alex Leary contributed to this report.

YOU MIGHT ALSO LIKE

Advertisement
Advertisement