The House and Senate passed the sweeping GOP tax plan on near-party-line votes as congressional Republicans moved to give President Trump his most significant legislative victory of the year — one that has come at a steep political cost.
Polling indicates the $1.5-trillion package remains broadly unpopular, contributing to a political environment in which surveys, including some by Republican groups, show the party in serious danger of losing control of Congress in next year’s midterm election.
Those political problems may be especially acute in parts of California, where the bill, sold as a tax-cut, is expected to lead to tax increases for a significant number of individuals and families. That’s largely because it curtails the current deduction for state and local income and property taxes.
Many of those voters live in affluent suburban areas, such as Orange County, that have often backed Republicans. Democrats already have gained in suburbs nationwide this year and believe the tax bill’s unpopularity will give them an opening to sway more voters to their side.
Concern over the state and local tax deduction led two Southern California Republicans, Reps. Darrell Issa of Vista and Dana Rohrabacher of Costa Mesa, to join others from New York and New Jersey, which are similarly affected, in voting against the bill in the 227-203 House roll call Tuesday. In all, 12 Republicans opposed the tax plan. No Democrats voted for it.
Senate approval shortly after midnight fell similarly along party lines, 51 to 48, with only Republicans voting yes. Republican Sen. John McCain, who returned home to Arizona as he fights brain cancer, did not vote.
Republicans have been rushing the bill to passage — Trump tweeted congratulations after the House vote for what he has called a Christmas gift for Americans — but it ran into a last-minute problem in the Senate.
Some small provisions, including one pushed by Sen. Ted Cruz (R-Texas) that would have expanded college savings plans to allow use for home-schooling, were ruled to violate the chamber’s procedures and some of the language had to be stripped from the bill.
Fixing that glitch will require an unusual additional vote in the House, which was quickly scheduled for Wednesday, before the bill can be sent to Trump for his signature.
Republican leaders say the overhaul, which is centered on a huge cut in corporate taxes, will spur economic growth and become more popular once it takes effect.
“No concerns whatsoever,” said House Speaker Paul D. Ryan (R-Wis.), who has spent his career trying to lower taxes and shrink government.
“When we get this done and people see the withholding improvement, when they see the jobs occurring, when they see bigger paychecks,” he told reporters, “that’s what’s going to produce the results.”
In saying that, however, Ryan sounded much like one of his predecessors as speaker, Rep. Nancy Pelosi (D-San Francisco), who insisted in 2010 that the Affordable Care Act, passed with only Democratic votes, would become more popular once Americans experienced it. It didn’t — at least not right away — and instead contributed heavily to the Democrats’ losing their House majority that year.
On Tuesday, Pelosi called the tax bill an “all-out looting of America.”
“This is the worst bill to ever come to the floor of the House,” Pelosi said. “The American people see this tax scam for exactly what it is.”
Before the House vote, protesters in the gallery shouted, “Kill the bill!” and interrupted speeches by Ryan and other lawmakers. Hours later, similar protests interrupted the final Senate roll call.
Americans reject the tax plan by a wide margin, roughly 2 to 1, according to a new Monmouth University poll. In a Wall Street Journal/NBC poll released Tuesday, just 24% of respondents said the tax bill was a good idea, compared with 41% who called it a bad one — a significant decline from the bill’s standing earlier this fall.
Senate Majority Leader Mitch McConnell of Kentucky conceded that Republicans hadn’t yet convinced Americans of the merits of the bill.
“We’re just beginning to make the argument to the American people,” McConnell told reporters, despite the months of debate over the tax measure. “The argument is still out there to be won.”
The legislation “will provide much-needed relief to middle-class families and small businesses, and will set America on a trajectory towards more opportunity and greater prosperity,” he said earlier in the day.
Outside analysts, though, have warned that the benefits of the tax overhaul will largely flow to corporations and the wealthy, with lower- and middle-income households seeing only modest improvements.
Moreover, the cut in corporate tax rates will be permanent, while the breaks for individuals and families are scheduled to expire in 2025.
The nonpartisan Tax Policy Center estimates that households will see their taxes reduced by $1,600, on average, in 2018. That’s on par with Republican claims.
But those savings are uneven across income levels.
Taxpayers earning less than $25,000 will save about $60 a year, while the top 1%, earning more than about $733,000 annually, would see a roughly $50,000 cut, or 3.4% of their after-tax income. Middle-income taxpayers, earning between $49,000 and $86,000, would see an average tax cut of about $900.
Among middle- and upper-middle-income households, results will vary widely, depending not only on state and local taxes, but also on the number of children they have and even how they earn their income. The measure treats income from businesses more favorably than wages.
“The basic story of the bill has remained the same since it was first introduced in early November,” Tax Policy Center analyst Howard Gleckman wrote. “Most households would get a tax cut at first, with the biggest benefits going to those with the highest incomes.”
Central to the legislation is a reduction in the corporate tax rate from 35% to 21%. Republicans say the resulting economic growth will more than cover the cost to the Treasury. Most independent economists, however, warn that growth will not be so robust and that the $1.5-trillion package will add to the federal deficit.
For individuals, the tax bill is mixed. Once envisioned as a simplification that would allow Americans to file tax returns on a postcard, it has not fully met that goal. Rates will be lowered, including the new top rate of 37%, which will hit households earning $600,000 or more.
A bigger standard deduction, at $12,000 for single filers or $24,000 for couples, is intended to replace many popular write-offs.
The state and local tax deduction will be capped at $10,000, covering both income and property taxes. Mortgage interest deductions will be limited to loans of $750,000, rather than the $1 million in current law, a change that is expected to ripple through housing markets in high-cost areas.
Other deductions that had been targeted for elimination were salvaged in last-minute negotiations between House and Senate Republicans, including those for medical expenses, student loan interest and graduate student tuition waivers.
A child tax credit championed by Sens. Marco Rubio (R-Fla.) and Mike Lee (R-Utah), with backing from presidential advisor and daughter Ivanka Trump, will be doubled to $2,000. Part of that, $1,400, will be refundable for those who pay payroll taxes but don’t owe income tax.
The legislation will effectively repeal the Affordable Care Act’s mandate that all Americans carry health insurance, starting in 2019, by doing away with a tax on those who fail to have coverage.
Republicans shrug off the poor standing the bill has in polls as no different from the last major rewrite of the tax code, under President Reagan in 1986. But the current proposal is significantly less popular than that one.
As Monmouth warned in its analysis of the polling data, the bill gets especially poor ratings in suburban areas where the Republicans already have struggled this year.
“The package doesn't play well in areas of the country that the GOP needs to win in 2018,” the university said.
Republicans in Congress, though, have pushed past those worries. They’ve been eager to deliver a legislative win for Trump’s first year in office and make good on some of their campaign promises before facing voters, especially after the collapse of their efforts to repeal Obamacare.
Many of the tax cuts will take effect in the new year, meaning workers can adjust their withholding to see the change in their paychecks.
Despite the GOP’s majorities in both houses of Congress, passing the tax cut has not been easy.
To win over holdouts, Republican leaders included various provisions, including one to open the Arctic National Wildlife Refuge to oil and gas drilling, which was important to Sen. Lisa Murkowski (R-Alaska).
Republican Sen. Susan Collins, a centrist from Maine, announced her support after winning other concessions, including future votes to help stabilize Obamacare marketplaces.
The lone Senate Republican who opposed the overhaul earlier, Sen. Bob Corker of Tennessee, now supports the bill, brushing back criticism that he will personally benefit from it.
As the Senate cast the final roll-call vote, Treasury Secretary Steven T. Mnuchin watched from the chamber’s floor. Vice President Mike Pence, who had postponed a Middle East trip so he could be on hand if needed to cast a tie-breaking Senate vote, presided.
“It’s so important I would not be able to comprehend not getting it done,” said Rep. Chris Collins (R-N.Y.), a Trump ally.
“We were always going to be attacked that it was a tax cut for the wealthy, even though it’s not,” he said. “The public doesn’t understand it.”