GOP strikes deal on Trump tax cuts

Senate and House Republicans have struck an agreement on a sweeping tax-cut bill that, if passed, would be the first major piece of legislation signed by President Trump.

Senate Republican leaders shared the details of the revamped bill with members of their conference at lunch on Wednesday and Speaker Paul Ryan (R-Wis.) updated his colleagues later in the afternoon.

“I’m confident we’ll pass the bill next week,” Senate Republican Whip John Cornyn (R-Texas), a member of the Senate-House negotiating conference, told reporters.

GOP leaders plan to hold an initial procedural vote on Monday, a final Senate vote Tuesday and then send the measure to the House for final passage.  

{mosads}Senate Majority Leader Mitch McConnell (R-Ky.) heralded the development as something that would boost the middle class.

“We want to take more money out of Washington’s pocket and put more money into the pockets of the middle class. I’m confident the conference committee will finalize a bill that does just that,” he tweeted.

Senate negotiators convinced their House counterparts to preserve two important middle-class tax breaks: the deduction on student loan interest and the exclusion for tuition waivers received by graduate students.

“Folks who are in grad school will feel pretty good about the final result,” said Sen. Mike Rounds (R-S.D.).

GOP sources familiar with the conference committee talks said negotiators are now cleaning up some of the details on paying for last-minute changes to the bill, which would lower the top individual tax rate to 37 percent and set the corporate tax rate at 21 percent.

Negotiators were waiting Wednesday evening for a budget score from the Joint Committee on Taxation.

The 21 percent corporate rate is a slight uptick from the 20 percent rate initially favored by President Trump, and House conservatives said they didn’t like the increase. But with a tax victory so close, they said the tweak would not be a deal breaker.

“We don’t like it; it causes some consternation. I am concerned about the business rate,” Rep. Mark Walker (R-N.C.), chairman of the conservative 155-member Republican Study Committee, told The Hill on Wednesday. “When these business communities are looking to build, every percentage point is a major factor in this, so we want to be careful in going in that direction.

“But it’s not a deal breaker,” he added.

The bill would also cap the popular mortgage interest deduction at $750,000, a midpoint compromise between the Senate and House bills.

Senate Republicans left a midday meeting on the bill sounding a positive note.

“I don’t think there’s going to be any doubt this is going to be a very pro-growth tax package,” said Sen. Ron Johnson (R-Wis.).

“There’s been a real healthy melding of House provisions and Senate provisions. My guess is it’s going to have broad support,” he added.

Several lawmakers warned that the package is not yet final. Still, even those disappointed that the corporate rate wasn’t kept at 20 percent said they were satisfied.

“There are things in there I don’t like,” said Sen. David Perdue (R-Ga.), who initially wanted a 15 percent corporate rate.

That said, Perdue added: “I’m more convinced than ever that this is going to be extremely stimulative.”

Negotiators are still working on how many tax brackets to set, said congressional aides. Republican senators said they expected the final bill to tilt toward the seven brackets they passed in their version.

Lawmakers are rushing to get the bill done before the Christmas holiday.

The deal was struck before the first and only official House-Senate conference committee meeting on the bill was held Wednesday afternoon, prompting grumbling from Democrats.

Sen. Joe Manchin (D-W.Va.), who was once seen as a potential Democratic vote for the bill, said he wanted to observe the conference meeting but “I was told before the conferees met, they already had a deal.”

Democrats have generally been locked out of the process as Republicans have sought to finish their legislation before the end of the year.

The legislation will repeal the federal mandate requiring people to buy insurance — a core piece of ObamaCare. 

The bill also would give some relief to people in high-tax areas by allowing them to deduct up to $10,000 in state and local taxes.

The deduction for pass-through companies will be set at 20 percent, somewhat lower than the 23 percent included in the Senate-passed bill. But that will be offset by lowering the top individual income rate to 37 percent from its current level of 39.6 percent.

Johnson said the pass-through rate will include trusts and establish an effective top tax rate of 29.6 percent.

Meanwhile, a provision to set a corporate alternative minimum tax — which would have raised $40 billion over 10 years — has been stripped out.

Several Senate Republicans are not happy about the proposal to lower the top individual rate to 37 percent, but they acknowledged they needed to give some ground to House negotiators. 

“It would not have been one of my high priorities, there would have been other priorities for me, but we’re dealing with the House. We all know we’re not going to get everything we want,” Rounds said.

Sens. Susan Collins (R-Maine) and Marco Rubio (R-Fla.) also balked at lowering the top individual rate to 37 percent, but it’s unlikely that the change will cause them to oppose the bill.

“I’m going to wait and look at the entire conference report once it comes out,” Collins said.

The Trump administration and GOP leaders have helped win over Collins by promising to pass legislation to shore up the individual health insurance markets.

Vice President Pence assured Collins of the commitment to pass legislation authorizing the payment of subsidies to insurance companies and funding states to set up high-risk reinsurance pools to keep premiums in check.

“I had a very good discussion with the vice president yesterday about that issue and I feel certain the agreement that I negotiated will be kept — this year,” she said.

Jordain Carney contributed.

 

 

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Details of Senate-House tax deal

• Lowers the top individual tax rate from 39.6 percent to 37 percent.

• Lowers the corporate tax rate from 35 percent to 21 percent — 1 percentage point higher than the 20 percent rate initially favored by the Senate and House.

• Sets the deduction for pass-through businesses at 20 percent, which combined with lower top rate for individuals yields an effective top tax rate of 29.6 percent.

• Caps the mortgage interest deduction at $750,000, midway between the $500,000 threshold set by the House and the $1 million threshold set by the Senate.

• Doubles the exemption of the estate tax, the Senate position.

• Preserves the tax exclusion for tuition waivers received by grad students.

• Preserves the deduction for student loan interest.

• Preserves the deduction for medical expenses, setting the floor at 7.5 percent of adjusted gross income for two years.

• Repeals the corporate alternative minimum tax.

• Raises the exemption for the personal alternative minimum tax to $500,000 for individuals and $1 million for families. 

• Eliminates the penalty for not having health insurance, effectively eliminating ObamaCare’s individual mandate. 

• Opens the Arctic National Wildlife Refuge to energy exploration.