WASHINGTON—U.S. Senate Republicans headed toward passage Friday of a $1.5-trillion tax bill that bestows massive benefits on corporate America and the wealthy while delivering mixed blessings to everybody else.
After a frantic round of negotiations, Republicans came together in near unanimity behind the landmark legislation. The vote on final passage, expected late Friday night, was shaping up to be 51-49, with Sen. Bob Corker, the lone GOP holdout.
The measure would still have to be reconciled with an earlier House-passed version before being sent to President Donald Trump. Yet in getting the bill through the Senate, Republicans would succeed where they failed this year, when their efforts to repeal the Affordable Care Act collapsed in mortifying fashion.
This time, urged by donors and fearful of facing voters in next year’s midterms without a legislative achievement to show, Republicans said time and again that failure was not an option.
“The American people wanted change,” said Sen. John Barrasso. “We were able to deliver.”
The centrepiece of the GOP plan is a move to lower the corporate tax rate from 35 per cent to 20 per cent, starting in 2019. The Senate tax bill would also temporarily cut tax rates for families and individuals until 2025.
But the bill would kill a number of tax benefits. It would subject fewer people to the estate tax, a levy charged on massive inheritances, but stop short of eliminating that tax altogether.
The most recent review of the bill by the Joint Committee on Taxation, Congress’ nonpartisan tax analysts, found that only 44 per cent of taxpayers would see their burden reduced by more than $500 in 2019 but that high earners would fare much better than the poor under the bill.
And the bill makes other changes that reach far beyond the tax code itself. It repeals the individual mandate from the Affordable Care Act, a major change that was added in recent weeks as part of a broader GOP effort to dismantle the Obama-era law. The individual mandate creates penalties for many Americans who don’t have health insurance, but the repeal is projected to leave 13 million more people uninsured.
It authorizes oil drilling in the Arctic National Wildlife Refuge in Alaska. And by curtailing deductions for state and local taxes, it will put pressure on some state and local spending on education, transportation, and public health programs.
The tax package still must clear a couple more hurdles before it can become law. There are numerous differences between the House and Senate versions, ranging from when certain tax cuts would expire to how the estate tax is handled. And though none are seen as showstoppers, complications could arise. There will be major implications for the taxes paid by families and individuals, based on how those discussions go. And the discussions over the tax bill will proceed as Congress simultaneously faces a Dec. 8 deadline for government funding to expire.
Nonetheless, GOP leaders still aim to get a final bill on Trump’s desk before Christmas.
For Trump, a victory on the tax plan would stand as a signal triumph, in sharp contrast with the political troubles besetting the White House on other fronts, especially with the Senate action coming on the same day that former national security adviser Michael Flynn pleaded guilty to lying to the FBI about his contacts with the Russian ambassador.
At nearly 500 pages, the emerging Senate tax bill provides breaks for industries small and large, but one particular provision sparked a heated exchange Friday night, something Democrats calling it the “Hillsdale carveout.”
That’s for Hillsdale College, the small school in Michigan that has a large endowment funded by the DeVos family and other wealthy conservatives.
A last-minute inclusion in the legislation, authored by Sen. Patrick Toomey, R-Pa., would exempt any college that does not accept federal funding from a 1.4 percent tax on investment income from university endowments.
There are a dozen or so colleges that do not accept federal funding, but Democrats believe that Hillsdale might be the only one that actually qualifies for this new tax benefit under the language proposed.
Senate leaders had little margin for error, since they can lose only three GOP votes and still prevail in the closely divided chamber. Democrats are unanimously opposed to the bill, and took turns Friday delivering scorching floor speeches slamming it as a giveaway to the rich.
Friday’s progress was a turnaround for Republicans after the bill hit snags Thursday. An unfavorable economic analysis had inflamed Corker, who was demanding, assurances that the bill not add to the deficit. Corker wanted a “trigger” added to the bill to kick in and raise rates if growth projections weren’t met, but the Senate parliamentarian ruled his plan unworkable under the complex rules governing the legislation.
Negotiations went through the night, but on Friday it emerged that Corker’s demands would not be met. There will be no “trigger” in the bill, nor any other mechanism to make up for a $1 trillion deficit increase that congressional scorekeepers say will result from the bill, even when taking into account economic growth.