WASHINGTON — The House passed a sweeping $1.5 trillion tax bill on Tuesday that slashes tax rates for corporations, provides new breaks for private businesses and reorganizes the individual tax code.
With the Senate expected to follow suit as soon as Tuesday night, President Donald Trump could sign the package, dubbed the Tax Cuts And Jobs Act, into law before week’s end. It would be his first significant legislative accomplishment and the biggest tax overhaul in a generation.
The Republican bill was approved on a 227-203 vote in the House, with no Democrats supporting it. Twelve Republicans also voted against the measure.
The bill, the product of negotiations between the House and Senate, achieves longtime Republican goals, including a permanent reduction in the corporate tax rate to 21 percent from 35 percent that supporters argue will make American business more competitive overseas.
Many pass-through businesses also receive a more complicated 20 percent deduction, which became a subject of fierce debate after the final bill added a provision likely to benefit real estate companies like Trump’s.
House Speaker Paul Ryan, R-Wis., spoke on the House floor moments before the vote and said the legislation will “help hard-working Americans who have been left behind for too long.”
“Today, we are giving the people their money back,” he said, adding that a typical family would get a $2,059 tax cut next year.
Debate in the Senate on Tuesday night could go on for as long as 10 hours, but passage is a virtually certainty. No Senate Democrats are expected to back the plan, but Republicans have enough votes to pass the bill on their own.
Democrats opposed the legislation as a boon to the wealthy while offering little for the middle class, with House Minority Leader Nancy Pelosi, D-Calif., calling it “the worst bill to ever come to the floor of the House.”
The bill lowers individual tax rates, including the top bracket to 37 percent from 39.6, while doubling the standard deduction and replacing personal exemptions with a $2,000 partly refundable child tax credit. It eliminates various deductions while limiting others on state and local taxes and mortgage interest. It also exempts larger inheritances from the estate tax, doubling the thresholds to $11 million for individuals and $22 million for married couples.
The bill also has significant implications for health care, where it abolishes the Affordable Care Act’s penalty for Americans who don’t purchase insurance. The Congressional Budget Office estimates that change would lead 13 million more Americans to go without coverage after a decade and cause premiums on the individual market to rise 10 percent per year.
At the White House, Press Secretary Sarah Huckabee Sanders, anticipating final passage of the bill in the Senate on Tuesday night, said, “The president will have delivered the most significant tax cut in the history of the nation.”
“We will look forward to signing it, hopefully in the next couple days,” she added.
While Republicans are enthusiastic about their efforts, the legislation is also intensely unpopular with the American public, with numerous surveys showing voters skeptical they’ll gain from its temporary cuts to individual rates in comparison to shareholders, business owners and the wealthy — all of whom are poised to receive significant benefits. Separate polls by Quinnipiac, Marist and Monmouth this month found support for GOP tax efforts in the mid-20s, with other surveys placing it somewhat higher.
“Republicans will rue the day that they pass this tax bill because it’s so unfair to the middle class,” Senate Minority Leader Chuck Schumer, D-N.Y., said shortly before the House vote. “It so blows a hole in our deficit, it so threatens Social Security, Medicare and Medicaid. They will rue the day.”
Republicans lawmakers argue that voters will come around to the legislation as members tout its benefits at home and taxpayers see gains in their own returns and in the broader economy. Trump boasted in a tweet on Tuesday that the stock market had risen in recent months.
“I don’t think we’ve done a good job messaging,” Rep. Greg Walden, R-Ore., told reporters ahead of the vote. “I don’t think we’ve gotten out there the specifics and the final bill has only come together in the last week or so.”
White House director of legislative affairs, Marc Short, said Americans’ opinion of the GOP tax plan would improve in the months ahead.
“I think that is going to change, we will see once the economy continues to roar and people begin to see more coming in their paycheck,” Short said on MSNBC.
The Joint Committee on Taxation, the official Congressional scorekeeper, estimates every income group would receive an average tax cut next year. But the JCT also found taxes would go up for lower incomes over time, in part because fewer eligible taxpayers would choose to receive health care subsidies through the ACA.
The nonpartisan Tax Policy Center, which did not factor in the health care changes, estimated that 80 percent of taxpayers would see a tax cut in 2018 and 4.8 percent see a tax increase, with many low-income households seeing little change either way. But the portion of taxpayers facing a tax increase would rise to 53.4 percent in 2027, when the bill’s temporary tax breaks expire.
Republicans argue future Congresses will extend those breaks. According to the TPC analysis, 65 percent of the bill’s benefits would go to the top 20 percent of earners in 2018, with the wealthiest 0.1 percent getting an average cut of $193,380. For the middle 20 percent of earners, the average tax cut would be $930.