Republicans’ $1.5 Trillion Tax Plan Appears on Track to Pass Next Week

Republicans’ $1.5 Trillion Tax Plan Appears on Track to Pass Next Week

2017-12-16 20:13:54

The bill also includes changes large and small to appease business lobbyists and their congressional champions, such as additional tax relief for the owners of engineering and architectural firms and the elimination of a change in capital gains treatment of homes sales — a key priority for the real estate industry.

One of the biggest changes came on Friday, when lawmakers agreed to a demand by Mr. Rubio to expand the child tax credit by allowing families who owe no federal income taxes to still claim up to $1,400 of the $2,000 child tax credit, up from $1,100 in the original version. But that change was offset by limiting the bill’s benefits to some higher-income families, and by restricting it to children age 16 and below, down from 17 and below in the Senate bill. The net result was a credit that is more lucrative for lower-income earners but actually slightly less costly than the Senate bill.

Republicans must stay within a $1.5 trillion limit that lawmakers have allowed on the amount the bill can add to federal deficits if they want to pass it without Democratic support.

The bill’s price tag had been a sticking point for one senator, Mr. Corker, a longtime deficit hawk, who voted against the initial Senate bill over concerns it would add to the federal debt. But on Friday, he said he was swayed to support the bill despite its cost. The congressional Joint Committee on Taxation analysis showed the Senate plan would add $1 trillion to the federal budget deficit.

“This bill is far from perfect, and left to my own accord, we would have reached bipartisan consensus on legislation that avoided any chance of adding to the deficit, and far less would have been done on the individual side with items that do not generate economic growth,” he said.

What’s in the Final Republican Tax Bill

The legislation would cut taxes for corporations. American taxpayers, in large part, would also get cuts, though most of the changes affecting them would expire after 2025.

In a tweet on Friday, Mr. Rubio called the Senate’s inclusion of the expanded credit “a solid step,” and a spokeswoman said he would now vote for the bill.

The bill’s text, which was signed by Republican negotiators from the chambers’ conference committee on Friday, includes few major changes from the version that passed the Senate this month. The 2025 expiration date for the individual tax cuts remains, as does the estate tax, which would apply to fewer Americans down the road. At the center of the $1.5 trillion bill are large tax cuts for corporations and other businesses, which Republican lawmakers say will create jobs, investment and economic growth.

Compared with the Senate bill, the revised legislation would lower some thresholds for entering a higher individual marginal tax bracket. For example, the top bracket for a married couple filing jointly would begin at $600,000 a year, down from $1 million in the Senate bill.

Owners of so-called pass-through businesses, who pay taxes on their profits at the owner’s individual tax rate, would receive a slightly less generous tax break than the Senate- and House-passed bills called for, allowing a 20 percent deduction on profits they earn. That deduction would phase out — with some exceptions — starting at $315,000 of income for couples. The Senate bill included a larger deduction, 23 percent, and a higher phaseout point, $500,000 for couples.

Two newly revealed changes on the business side would help offset revenue losses: a provision that limits corporations’ deductions of their net operating losses to 80 percent of their income starting next year, instead of in 2023 as the Senate bill called for, and one that would effectively reduce the annual value of research and development tax breaks starting in 2022. Those changes combined to raise an additional $100 billion.

Republicans released the bill’s text late on Friday afternoon and were aiming to vote on it next week.

The bill appears to be heading toward the finish line, though at least three other Republican senators remained publicly undecided on Friday, including Mike Lee of Utah, who has allied with Mr. Rubio in pressing for an expanded child credit, and Jeff Flake of Arizona, who has been trying to extract commitments from Republican leadership related to the Deferred Action for Childhood Arrivals, or DACA, program. Ms. Collins has also expressed reservations about the bill’s reduction in the top individual tax rate and pushed for party leaders to support measures to bolster individual health care markets as a condition for her vote.

Ms. Collins is still reviewing the bill, a spokeswoman said. A spokesman for Mr. Flake said the senator was undecided.

Mr. Lee, in a statement, sounded upbeat about the bill, saying Mr. Rubio and other senators “have done a tremendous job fighting for working families this week and they have secured a big win.” He added: “I look forward to reading the full text of the bill and, hopefully, supporting it.”

Mr. Trump, when asked about Mr. Lee and Mr. Rubio on Friday, said he had no concerns about their support.

“I think they’ll be great,” he said. “They’re great people. They want to see it done. I know them very well. I know how they feel. These are great people and they want to see it done, and they want to see it done properly.”

Mr. Trump also told reporters he had seen the bill, and he liked it.

“I have seen it,” Mr. Trump said in brief remarks at the White House. “I think it’s going to do very, very well. I think that we are going to be in a position to pass something as early as next week, which will be monumental.”

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