The House Ways and Means Committee on Thursday approved House Republicans’ bill to rewrite the tax code, advancing one of the GOP’s top legislative priorities after four days of debate.
The measure — which reduces the number of individual tax rates, slashes the corporate tax rate and eliminates many deductions and credits — was approved on a party-line vote of 24-16.
The only changes made to the bill during the markup were from amendments offered by Ways and Means Committee Chairman Kevin Brady (R-Texas).
{mosads}
Thursday afternoon, Brady made a number of changes to the bill which included restoring the adoption tax credit, additional tax relief for pass-through businesses and higher tax rates on repatriated foreign earnings. Brady also offered an amendment on Monday.
Brady said the amendment “takes action on three crucial priorities — helping American families, providing tax relief to Main Street startups and increasing American competitiveness.”
“Americans deserve a new tax code for a new era of prosperity, and today we deliver,” Brady added.
Republicans and Democrats argued during the markup over whether the bill would help the middle class. GOP lawmakers pointed to estimates from the Joint Committee on Taxation that showed that on average every income group would get a tax cut in 2019.
“It was established over and over again that the Joint Committee on Taxation says taxpayers at every quintile will pay less taxes under this plan,” said Rep. Tom Rice (R-S.C.).
But Democrats cited Joint Committee on Taxation estimates that showed some middle-class taxpayers would still see their taxes go up, particularly in later years.
“This bill will raise taxes on the middle class. It will raise taxes on the middle class. It will raise taxes on the middle class,” said Rep. Joseph Crowley (D-N.Y.).
The eventual tax increases are linked to several credits that are set to expire after five years, an effort to keep the bill within the allowed deficit limits. Republicans say they expect the credits will eventually be renewed, which would reduce the tax burden, but increase deficits.
Most of the amendments offered during the markup came from Democrats. Many of them called for restoring popular tax breaks that the bill had planned to eliminate, such as the full state and local tax deduction and the medical expense deduction. Other amendments proposed creating new tax credits aimed at helping the middle class.
“You don’t have very many tools available to you as the minority members of the House, not like the Senate,” said Ways and Means Committee ranking member Richard Neal (D-Mass.). “And so you use messaging to make your argument and hope that the other side might, on a couple at least, acquiesce.”
While some GOP lawmakers have also shown an interest in restoring some of the tax breaks Democrats highlighted, all of the Democrats’ amendments failed on party-line votes. Republicans viewed Democrats as playing games and didn’t want to go along with their messaging efforts.
“I’m not going to engage in this political theater any longer,” said Rep. Tom Reed (R-N.Y.).
The bill now heads to the House floor, where GOP lawmakers are optimistic that it will pass without much difficulty.
Most of the GOP lawmakers who have come out against the bill so far are from blue states that would be hurt by the bill’s treatment of the state and local tax deduction. The bill would repeal the deduction for state and local income taxes while capping the property tax deduction at $10,000.
However, other GOP lawmakers from New York, New Jersey and California are expected to vote “yes” — including Rep. Tom MacArthur (R-N.J.), who voted against the budget over state and local tax deduction concerns.
Rep. Walter Jones (R-N.C.), who often bucks GOP leadership, has also said he’ll vote against the bill because it adds to the deficit.
And it is possible that as a floor vote approaches, more GOP lawmakers could come out against the measure over concerns with various provisions.
House Republicans are expected to make additional changes to the bill before it is brought to the floor but are not expected to allow amendments on the floor.
Complicating matters is that Senate Republicans on Thursday released a tax bill that has significant differences with the House bill. The Senate bill maintains seven tax brackets instead of four, lowers the top rate to 38.5 percent from 39.6 percent and doubles the threshold on the estate tax, but does not eliminate it.
It fully repeals the state and local tax deductions.
It also put off the corporate rate drop for a year, a delay that President Trump and his administration have opposed.
Unlike the House bill, it leaves the mortgage interest deduction untouched and leaves the medical expense deduction in place as well.