House Republicans unveil sweeping plan to slash tax rates: House Republicans on Thursday released their long-awaited legislation to overhaul the tax code, proposing major cuts to corporate and individual tax rates.
The 429-page bill, called the “Tax Cuts and Jobs Act,” represents the opening salvo in the GOP’s fight to rewrite the tax code for the first time in more than 30 years.
“It’s the beginning of the end of this horrible tax code,” House Ways and Means Committee Chairman Kevin Brady (R-Texas) said.
{mosads}
The bill largely follows the parameters that GOP leaders and the White House outlined in September. It would reduce the number of individual tax brackets, slash rates for businesses and eliminate a number of tax breaks.
In order to offset the costs of the legislation, Republicans are putting forward some proposals that are sure to be controversial. The Hill’s Naomi Jagoda and Scott Wong break it down: http://bit.ly/2yphy2H.
Read the House GOP’s 429-page tax bill here.
Trump backs House GOP tax bill: President Trump on Thursday expressed support for the new House Republican tax bill, praising lawmakers for “another important step toward providing massive tax relief for the American people.”
Trump said that while there is “much work left to do,” the administration would “deliver historic tax cuts and reforms — the rocket fuel our economy needs to soar higher than ever before.”
“The special interests will distort the facts, the lobbyists will try to save their special deals, and some in the media will unfairly report on our efforts,” Trump said in a statement released shortly after Republicans unveiled their proposal. “But my Administration will work tirelessly to make good on our promise to the working people.”
Soon after Trump’s statement, White House National Economic Council Director Gary Cohn said Trump “can support” the House GOP plan released Thursday morning: http://bit.ly/2ypeljy.
What’s new, what’s gone, and what’s changed in the GOP tax plan. We’ve got way more tax coverage for you later in the newsletter.
Trump names Powell as chairman of Federal Reserve: President Trump announced Thursday that he will nominate Federal Reserve Governor Jerome Powell to be chairman of the central bank.
Powell, a Republican appointed to the Fed by President Obama in 2012, served as a Treasury Department undersecretary during the George W. Bush administration.
If confirmed, Powell will replace Fed Chairwoman Janet Yellen, whose term leading the bank ends in February.
Trump praised Powell, known as Jay, for being able to lead the Fed with “sound monetary policy and prudent oversight of the financial system.”
“Jay has earned the respect and admiration of his colleagues for his hard work, expertise and sound judgment,” Trump said during Thursday’s announcement in the White House Rose Garden.
“He’s strong, he’s committed, he’s smart,” Trump said, calling Powell a “consensus builder.”
Powell said he was “honored” and “humbled” to be nominated to lead the Fed, and praised his potential predecessors Yellen and former Fed Chairman Ben Bernanke for leading the U.S. economy through the financial crisis. I’ve got more from the announcement here: http://bit.ly/2yoQa4P.
Trump praises Yellen while replacing her: President Trump on Thursday praised outgoing Federal Reserve Chairwoman Janet Yellen during an event announcing her replacement.
Trump veered from his prepared remarks to call Yellen “a wonderful woman who’s done a terrific job” leading the nation’s central bank.
“She is absolutely a spectacular person,” the president said. “For the past four years, she has served with dedication and devotion, and we are thankful for her total commitment to public service.”
The president, however, passed at the chance to nominate Yellen for a second term and instead selected Federal Reserve Board Governor Jerome Powell to replace her.
It’s the first time the chairman of the Federal Reserve, after serving one four-year term, has not been nominated for a second term.
Trump was a fierce critic of Yellen and the Fed during his 2016 presidential campaign, accusing her of keeping interest rates low to artificially boost the economy.
But as the stock market rallied and economic indicators remained positive after his election, Trump turned into a fan of the Fed chairwoman: http://bit.ly/2ypqQMf.
Happy Thursday and welcome back to Overnight Finance. I’m Sylvan Lane, and here’s your nightly guide to everything affecting your bills, bank account and bottom line.
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Back to taxes…
Winners and losers in GOP tax bill: Not everyone benefits equally from the tax legislation that House Republicans unveiled Thursday.
GOP leaders toiled for weeks to decide what deductions and tax breaks should be axed to pay for the tax cuts. That means the bill creates some winners and some losers.
Republicans say their plan will simplify the code and provide tax relief to middle-class families.
Speaker Paul Ryan (R-Wis.) repeatedly touted an example on Thursday of how a family of four earning the median American household income of $59,000 would save $1,182 a year on their taxes, using the proposed doubled standard deduction, reduced tax rate and expanded child tax credits.
But Democrats argue that most of the benefits of the GOP tax proposal will flow to the ultra-wealthy and corporations.
Here’s a look at who stands to gain and who stands to lose out. http://bit.ly/2zgpbaX
More highlights of the tax bill:
- It would eliminate medical expense deductions
- It would allow churches to endorse political candidates
- It would end the electric vehicle tax credit and overhaul other energy taxes
- It would lower the ceiling on mortgage interest deduction on new homes
- It would eliminate tax-exempt bonds for professional sports stadiums
Panel: Tax bill would cost $1.487 trillion over ten years: The Republican tax proposal released Thursday would add $1.487 trillion to United States deficits over the course of a decade, according to an evaluation by the Joint Committee on Taxation.
That figure means the bill falls under the $1.5 trillion threshold Republicans set in the 2018 budget plan, which could allow them to pass the bill with a simple majority in the Senate instead of the usual 60 votes.
However, for the Senate procedure to allow the law’s provision to become permanent, the legislation cannot add to the debt after the first decade. The committee’s evaluation does not examine the cost of the bill after 10 years.
According to the committee, the plan would save some $929 billion from changes to individual taxation, and $846 billion in changes from corporate taxation in its first decade.
It also gave details on what some specific provisions of the bill would cost or add to federal budgets. http://bit.ly/2za6oMp
Republicans launch sales push for plan: House Republicans have rolled out their long-awaited tax reform bill. Now they have to sell it.
Speaker Paul Ryan (R-Wis.), a policy wonk and former House Ways and Means Committee chairman, joined fellow GOP leaders at a news conference Thursday to make the case that the legislation gives a windfall to the middle class.
“This plan is for the middle-class families in this country who deserve a break,” he said, flanked by families who were invited to the press conference.
Under the GOP plan, a typical family of four, Ryan said, would save $1,182 a year on their taxes, a figure he repeated over and over. The Hill’s Scott Wong and Mike Lillis report: http://bit.ly/2yoFrrj.
NY, NJ Republicans show early opposition to tax bill: House Republicans from New York and New Jersey came out in opposition to the GOP’s long-awaited tax-reform bill on Thursday, citing the proposed elimination of the popular state and local tax deduction.
Most GOP members of the New York and New Jersey delegations voted against the budget blueprint this month to underscore to GOP leaders that they will hold firm on preserving the state and local tax deduction (SALT) used by their constituents.
New York, New Jersey, Illinois and California are among the highest-taxed states in the nation. Many individuals in those states take advantage of the state and local tax deductions to avoid double taxation on their income.
Under the legislation unveiled on Thursday, people could still deduct up to $10,000 on their local property taxes, but not other taxes paid to state or local governments. The Hill’s Cristina Marcos explains: http://bit.ly/2yptFwy.
Trump calls tax plan ‘a big, beautiful Christmas present’ for US: President Trump on Thursday hailed the Republican tax plan as a “big, beautiful Christmas present” for Americans, doubling down on his goal to sign it into law by year’s end.
“We’re working to give the American people a giant tax cut for Christmas,” he said at the White House. “We are giving them a big, beautiful Christmas present in the form of a tremendous tax cut.”
Trump repeated his false claim that the bill would deliver “the biggest tax cut in the history of our country.” That would be true if he was talking about corporate taxes, but not for the plan as a whole.
The president shifted into salesman-in-chief mode just hours after House Republicans unveiled their sweeping plan to slash individual and corporate tax rates. http://bit.ly/2ypEezM.
Dems call GOP tax bill a disgrace: Democrats are accusing Republicans of rushing the tax bill they introduced Thursday through Congress, saying the GOP does not want to expose the legislation to scrutiny.
The GOP plans to have the Ways and Means Committee begin consideration of the 429-page bill on Monday, and hopes the full House vote will take place the following week.
“That’s a disgrace, to rush a bill like this through, without a hearing, without scores, without experts that want to look at it,” Senate Minority Leader Charles Schumer (D-N.Y.) said at a Thursday press conference. “Why? They’re ashamed of this bill.”
The Democratic leader compared the tax bill to a fish out of water.
“If it stays out in the sunlight too long, it stinks,” he said.
But Democrats have little chance of blocking the legislation on their own. The Hill’s Niv Elis reports: http://bit.ly/2yoPOeB.
…And some moderate Democrats could jump on board: Conservative-leaning Democrats said Thursday that they’ll take a look at the Republicans’ sweeping tax-reform proposal in hopes of reaching a bipartisan deal — a sharp contrast to the immediate vilification coming from Democratic leaders.
The leaders of the Blue Dogs, while quick to bash the partisan process in which the GOP tax plan was forged, said they’re analyzing the legislation to see if it meets their standards. If Republicans cross the aisle for input, the lawmakers suggested, there may be room for them to jump on board.
“As Blue Dogs, the door is never closed to pursuing bipartisan solutions,” the three Blue Dog co-chairmen — Reps. Jim Costa (D-Calif.), Henry Cuellar (D-Texas) and Daniel Lipinski (D-Ill.) — said in a statement.
“Although we strongly disagree with the process that produced this tax bill, our members will evaluate its contents in a measured way to see how it compares to the principles of the Blue Dog Vision for Tax Reform. Mike Lillis reports: http://bit.ly/2ypfSpO.
House Republicans are getting blowback on all sides…
Left criticizes permanent corporate cut, temporary family credit: Liberals are blasting the GOP’s tax-reform plan for making a reduction in the corporate tax rate permanent even as a new family tax credit is phased out after five years.
The plan, released by House GOP tax writers Thursday morning, would cut the corporate tax from 35 percent to 20 percent, a major goal of President Trump and big business.
The family tax credit, which is targeted toward the middle class and would give people a new $300 credit for each child and non-child dependent, would be phased out after five years. The Hill’s Kim Dixon has more: http://bit.ly/2ypk9JZ.
Small business lobby opposed to GOP tax bill: A top small business group has come out against the Republican tax-reform bill, arguing the legislation “leaves too many small businesses behind.”
“We are concerned that the pass-through provision does not help most small businesses. Small business is the engine of the economy. We believe that tax reform should provide substantial relief to all small businesses, so they can reinvest their money, grow, and create jobs,” Juanita Duggan, the president and CEO of the National Federation of Independent Business (NFIB), said in a statement.
The bill would lower the top rate for income from “pass-through” businesses from 39.6 percent to 25 percent. These businesses, which include some small businesses, otherwise have their income taxed through the individual code on their owners’ returns.
But NFIB says that most small businesses wouldn’t qualify for the lower rate because of the way the new rate is structured. Naomi Jagoda explains: http://bit.ly/2yo5EpH.
Rubio: GOP tax bill doesn’t do enough to help working families: Sen. Marco Rubio (R-Fla.) said Thursday that the House GOP tax plan’s increase to the child tax credit doesn’t do enough to help working families.
Rubio said on Twitter that the House GOP’s proposed $600 increase to the child tax credit “doesn’t achieve our & [President Trump’s] goal of helping working families.”
The House GOP tax plan released Thursday calls for increasing the child tax credit to $1,600 per child from $1,000.
Rubio had previously called for increasing the child tax credit to $2,500 per child, pitching the idea in a Breitbart opinion piece. He and Sen. Mike Lee (R-Utah) have also introduced a Senate bill to increase the deduction.
Rubio and several other GOP lawmakers also met in June with Ivanka Trump, a senior White House adviser and the president’s older daughter, about the child tax credit and paid family leave. http://bit.ly/2ypajb5.
Debt watchdogs slam Republican tax proposal: Fiscal hawks are slamming the tax plan that House Republicans released Thursday, warning it would only deepen the nation’s debt woes.
“Passing a bill to our kids is not the right way to pass a bill. This legislation is an example of fiscal irresponsibility,” said Peterson Foundation President Michael Peterson.
The bill, Peterson argued, includes arbitrary phase-ins and expirations designed to mask the true costs of the legislation.
The 429-page bill, released Thursday, would slash income tax and corporate tax rates and pay for a portion of the cuts by eliminating deductions.
The Republican budget allows for tax cuts to add $1.5 trillion to the deficit over 10 years. That money would be paid for by borrowing, adding to annual deficits and the nation’s overall debt burden.
The Committee for a Responsible Federal Budget’s President Maya MacGuineas said an additional $1.5 trillion in debt amounts to almost $12,000 per household.
“Given the huge unpaid-for gap remaining, this plan does not constitute true comprehensive, revenue-neutral, and pro-growth reform,” she said. Niv Elis has more: http://bit.ly/2yo7maB.
Ethics watchdog: GOP tax bill written to cut Trump’s taxes: A government ethics watchdog argued Thursday morning that the newly released Republican tax bill was written to lower President Trump’s taxes.
Citizens for Responsibility and Ethics in Washington, a nonprofit that aims to reduce the influence of money in politics and foster government accountability, cited the bill’s intention to repeal the alternative minimum tax.
“In 2005, the one year of Trump’s taxes we’ve seen, the Alternative Minimum Tax cost him an extra $31 million,” the organization, which is linked to Democratic operative David Brock, tweeted. “This bill was written for him.” http://bit.ly/2yoSo4b.
And just so you know…
Gary Cohn is still a Democrat: President Trump’s top economic adviser said Thursday he is still a Democrat, despite his post in the administration.
“I still am,” said Gary Cohn, director of the White House National Economic Council, while addressing the Economic Club of Washington, Bloomberg reported.
Cohn also said that he intends to stay in his position “as long as I possibly can,” according to the report.
Cohn reportedly drafted a letter of resignation in August after Trump made the controversial remark that “people on both sides” were responsible for the violence at the white supremacist rally in Charlottesville, Va.
Cohn was also being considered to lead the Federal Reserve, but Trump announced Federal Reserve Governor Jerome Powell as his pick on Thursday afternoon: http://bit.ly/2ypwWfk.
From The Hill’s opinion pages:
No room for amnesty in our government spending bill, by Jenny Beth Martin
Trump’s tax plan is out and low-income Americans are the winners, by Gary Wolfram
Progress on tax reform, ignorance on spending, by Jack Solmon
Powell offers steady hand, deregulatory touch as Fed leader, by Bert Ely
Write us with tips, suggestions and news: slane@digital-release.thehill.com, vneedham@digital-release.thehill.com, njagoda@digital-release.thehill.com and nelis@digital-release.thehill.com. Follow us on Twitter: @SylvanLane, @VickofTheHill, @NJagoda and @NivElis