House leaders are poised for a Thursday vote on their tax-overhaul bill as Senate tax writers continue to debate their proposal to make individual breaks temporary and repeal a key part of the Obamacare law. Here are the latest developments, updated throughout the day:
Trump Reaches Out to Senator Ron Johnson (10:37 a.m.)
A Republican senator who declared his opposition to the Senate’s tax plan on Wednesday said President Donald Trump called him Wednesday night. Wisconsin Senator Ron Johnson didn’t elaborate on the conversation, but he told CNBC Thursday morning that he wants “to vote yes” on the tax-overhaul plan and he’s optimistic that his concerns can be addressed.
Johnson has said that in its current form, the Senate plan doesn’t offer enough benefits for closely held businesses organized as pass-throughs. Such businesses, which include partnerships, S corporations and sole proprietorships, pass their earnings to their owners, who pay income taxes at their individual rates.
The White House is working on addressing Johnson’s issue and is happy he expressed his concerns before the vote, according to a senior administration official who asked not to be named because the discussions were private. Trump is confident House leaders have the votes they need, the officials said.
Meanwhile, Trump is scheduled to meet with House Republicans Thursday ahead of the chamber’s floor vote on its tax legislation. That vote is scheduled for after 1:30 p.m.
House Speaker Paul Ryan said Thursday morning that the House will pass the package of tax rate cuts for corporations, businesses and individuals — and he dismissed studies that have said the measure would give some taxpayers higher bills.
“I’m sure there are some wealthy people out there with lawyers and accountants” who can take advantage of tax breaks under current law, Ryan said during an interview on “Fox and Friends.” When Congress acts to take away those advantages, “they’re not going to like that,” he said.
Some House Republicans from New York plan to vote no on the tax bill, citing its repeal of deductions for state and local income and sales taxes.
“It is supposed to be a tax cut bill but it will be raising taxes on people in our communities,” said Representative Peter King, a Long Island Republican. King spoke during a Thursday morning news conference that Representatives Lee Zeldin, John Faso and Dan Donovan of New York also attended.
Donovan of Staten Island added: “New York, New Jersey, California and Maryland: those are the people subsidizing this tax cut for the rest of America.”
King said his group has proposed to House leaders that they leave the full state and local tax deduction in place for four years, before phasing it out for those earning more than $400,000 a year. The House bill calls for just preserving one part of the so-called SALT deductions — a break for property taxes that would be capped at $10,000. The current Senate proposal calls for full repeal of SALT breaks.
In addition to the treatment of the state and local tax break, the House and Senate are working on different versions of tax legislation that have other significant differences. Those disparities will have to be worked out between the chambers before any measure can become law. Ryan called the legislation “a work in progress” and predicted it would get better after today’s vote. — Anna Edgerton, Erik Wasson and Tolu Olorunnipa
Trump to Rally House Vote Amid Senate Drama (4:00 a.m.)
President Donald Trump is scheduled to head to the House on Thursday, rallying Republican members before their long-awaited vote on tax legislation, which is expected to take place after 1:30 p.m.
House GOP leaders say they’re confident they have the votes to pass the bill. But even so, drama unfolding in the Senate could trigger a sequence of events that parallels Congress’s failed health-care effort from earlier this year.
In May, Trump invited House Republicans to the Rose Garden for a victory celebration after they passed legislation to repeal and replace the 2010 Affordable Care Act. The festivities proved premature when the health-care effort failed in the Senate four months later.
Should the House pass its tax bill Thursday, it’ll be dead on arrival under Senate budget rules that prevent adding to the federal deficit after 10 years. To meet that constraint, Senate GOP leaders plan on sunsetting their individual income tax breaks while making the corporate cut and international changes permanent.
The differences between the two chambers will have to be reconciled before either’s plans can become law — a goal they’ve set to accomplish before year’s end.
Nonetheless, tax legislation must begin in the House — so Thursday’s vote is critical to the effort, and House Republican leaders were leaving little to chance. They completed two hours of debate on the bill Wednesday and plan to conclude two more on Thursday before the vote.
Only about 10 House Republicans had declared by Wednesday that they’d vote no — and many of them cited a proposal to repeal or limit individuals’ state and local tax deductions. The House legislation would end all but the break for state and local property taxes, which it would cap at $10,000.
Republicans can spare 22 votes without Democratic support. House Minority Whip Steny Hoyer said Wednesday he didn’t expect any Democrats to support the bill.
Trump is gearing up to visit the chamber after his 12-day trip in Asia. He posted a message on Twitter on Wednesday evening saying: “Big vote tomorrow in the House. Tax cuts are getting close!” And while he’s met with Democrats to try to win their support on taxes, he continued to criticize them. “Why are Democrats fighting massive tax cuts for the middle class and business (jobs)?” Trump wrote. “The reason: Obstruction and Delay!”
It’s unlikely Trump will sway any of the moderate Republicans from high-tax states who’ve said they’ll vote against the tax bill. House Majority Whip Steve Scalise said he was still talking some members through their doubts about the bill, but he was confident that it would pass on Thursday.
On the other side of the Capitol, fresh changes to the Senate proposal are already spurring discontent among some GOP senators. Republican leaders have said they plan to pass the legislation without any Democrats, meaning they can only afford to lose two senators.
Republican Senator Susan Collins sounded the alarm against including the Obamacare individual mandate’s repeal in the tax bill. GOP Senator Ron Johnson emerged Wednesday as the first to say he’s opposed to the Senate tax proposal as it stands, complaining that it would disadvantage pass-through businesses in relation to corporations.
A final bill is more likely to resemble the Senate proposal, in part because of the upper chamber’s slim majority. Other divisive issues between the House and Senate could include where to set the top individual income tax rate, whether to retain the estate tax, when to begin a new, 20 percent corporate rate, how to treat pass-through businesses, and where to set rates for companies that bring offshore profits back to the U.S. — Sahil Kapur and Anna Edgerton
What to Watch on Thursday:
- The Senate Finance Committee will begin its markup at 11 a.m. and is expected to continue debating amendments. The panel concluded another heated markup on Wednesday evening, where most of the discussion focused on the Obamacare individual mandate repeal. Finance Chairman Orrin Hatch said the committee’s markup would continue into Friday if needed.
- Senator Ron Johnson of Wisconsin was the first GOP senator to officially oppose the tax plan — look to see if other Republican senators join him.
- Trump will speak to the House GOP conference at 11:30 a.m.
- The House will finish the remaining two hours of debate before a final vote.
Here’s What Happened on Wednesday:
- Johnson said his main concern is that the corporate rate will be slashed to 20 percent from 35 percent, while the top pass-through rate won’t fall as much.
- The National Federation of Independent Business said it “strongly supports” the revised Senate proposal. The NFIB had opposed an earlier version of the House tax plan.
- Senate Minority Leader Chuck Schumer seized on the sunset provisions to criticize the revised Senate plan. “Either tens of millions of taxpayers will pay significantly more the longer this plan is in effect, or a future Congress will extend the tax breaks, making the deficit hole they create massively deeper,” the New York Democrat said.
- Repealing the Obamacare individual mandate would increase premiums in the individual insurance market by about 10 percent, which would amount to increases of hundreds of dollars per year for about 7 million mostly middle-income consumers — and up to $1,000 per year for many older people — according to an estimate from the left-leaning Center on Budget and Policy Priorities.
— With assistance by Alexis Leondis, Sahil Kapur, Anna Edgerton, and Toluse Olorunnipa
