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House passes GOP tax overhaul, bigger battle lies ahead

Starting Jan. 1, the House plan would drop the top corporate rate dramatically, realign how Washington treats domestic and foreign income of multinational companies, and give individuals lower rates while eliminating some deductions and credits.
<p>WASHINGTON, DC - JUNE 06: Early morning Light hits the U.S. Capitol building on June 6, 2017 in Washington, DC. On Thursday June 8, former FBI Director James Comey will appear to before the Senate Intelligence Committee to testify.</p>

The House on Thursday voted to approve the first major rewrite of the tax code since 1986, a crucial step toward delivering one of President Trump’s signature promises.

Starting Jan. 1, the bill would drop the top corporate rate dramatically, realign how Washington treats domestic and foreign income of multinational companies, and give individuals lower rates while eliminating some deductions and credits.

But passage is only the first step on what could be a difficult process, and the final bill could look different.

A tax plan being considered in the Senate has different tax rates, business rules and phase-outs. Republicans there hold just 52 seats, meaning they can afford to lose just three votes if all the Democrats vote against it, and already Sen. Ron Johnson, R-Wis., said he cannot vote for the current plan.

Before voting, House Republicans met with Trump, who traveled the country this summer promising “massive” tax cuts for the middle class that would spur companies to expand and hire.

Lawmakers said the president didn’t get into any policy specifics Thursday and only made passing reference to differences between House and Senate proposals.

“He did complain to that it’s not bipartisan,” said Rep. Fred Upton, R-Mich.

Rep. Tom Cole, R-Okla., said Trump didn’t try to twist arms because House GOP leaders already have the votes.

“There’s not a lot of people left to persuade,” Cole said. “You’ve got a bunch of happy Republicans around here.”

“He really wanted us to go and be advocates for this great tax bill. He asked us to go to our districts and you know explain how regular folks are going to be helped,” Rep. Matt Gaetz, R-Fla., told USA TODAY. “There were no prepared remarks, it was pretty classic Trump,” Gaetz added.

House supporters have focused on the boost their bill would give to the economy.

"With some of the highest tax rates in the world for our businesses, we’re seeing good-paying American jobs and manufacturing plants move overseas — one after the other," Rep. Kevin Brady, R-Texas, said as debate began Wednesday night. "We have an opportunity to change all this.

But critics warned that higher deficits would become a drag on the economy and trigger budget laws that force cuts to Medicare. Lobbying groups representing home builders and realtors battled against the bill, saying it would take away the tax benefits of home ownership and thereby lower property values.

Also opposing the bill was AARP, the lobby for retirees and the elderly, which objected to the bill’s elimination of the deduction for serious medical expenses and other provisions.

"I'll probably get a tax break out of this, some of my constituents will," said Rep. Michael Capuano, D-Mass. "But what do we get in return? We don't get health care. We don't get better roads. We don't get better education. But we do provide a $5,000 to $10,000 debt for our children. We do tell our seniors, 'Too bad if you have a heart attack or cancer, no more medical deduction for you.' "

The plan was strongly endorsed by the U.S. Chamber of Commerce and by conservative groups such as Americans for Tax Reform and the Club for Growth. Political committees supporting Trump and House Speaker Paul Ryan, R-Wis., also funded commercials in districts represented by Republicans who were wavering on the bill.

The independent scorekeeper for tax bills, the Joint Committee on Taxation, said that a plurality of people at every income level would pay less under the bill. But within each income group, some people would see minimal change, and some who would pay more, especially after five years, when some new credits are set to expire.

For those making $50,000 to $75,000 in 2023, for example, JCT said 36% would get a tax break of $500 or more and another 19% would get a break of $100-$500. But 19% would pay within $100, plus or minus, what they pay now, 11% would pay $100-$500 more, and 15% would pay an extra $500 or more.

The Senate unveiled a different plan on last week that has more tax brackets, postpones some cuts the House would make right away, phases out some the House would keep, and keeps some deductions the House would eliminate. The Senate Finance Committee began a weeklong hearing on Monday, and by Tuesday night, Chairman Orrin Hatch, R-Utah, delivered a major rewrite.

Both chambers’ plans would lower revenues by about $1.5 trillion over the coming decade, sparking criticism and even attack ads on television from groups that have railed against deficit spending.

Republican leaders say they are certain the economy will grow faster to offset that loss, but the House did not wait for the taxation committee to prepare a complex study to see if that would happen before voting.

Contributing: Deirdre Shesgreen and Eliza Collins

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