House GOP passes sweeping tax cuts in Tuesday vote

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House Republicans passed a sweeping tax overhaul that delivers a deep, lasting cut for corporations and temporary benefits for individuals, putting President Donald Trump one step away from his first major legislative victory.

Dubbed the Tax Cuts and Jobs Act, passed 227 to 203. Only 12 Republicans—mostly from high-tax states where some taxpayers stand to see higher bills—voted against the measure.

The tax bill will dismantle a key piece of Obamacare: the individual mandate that requires people to purchase insurance.

The legislation—which has scored poorly in public opinion polls so far—will become one of the biggest issues in the 2018 elections that will determine whether the GOP retains its majorities in Congress.

The bill slashes the corporate tax rate to 21 percent from 35 percent, vaulting the U.S. into competition with other industrialized economies, which have an average corporate rate of 22.5 percent. It offers an array of temporary tax breaks for individuals and other types of businesses -- including rate cuts that will tend to favor the highest earners and an increased standard deduction that benefits lower- and middle-class workers.

The changes would reduce federal revenue by almost $1.5 trillion over the coming decade, before accounting for any economic growth that might result, according to Congress’s Joint Committee on Taxation, which analyzes tax legislation. Earlier versions were forecast to increase deficits by roughly $1 trillion, even after accounting for growth.

The bill now heads to the Senate, where careful deal-making by GOP leaders over the past month is expected to assure its passage. Trump has promised to sign the bill, which would represent the only major legislative accomplishment that the GOP has gained since taking control of both the legislative and executive branches in January.

The legislation succeeded after a rushed, secretive process that began in earnest only after the Senate gave up on its Obamacare-repeal efforts in September. A House bill first appeared on November 2, kicking off a six-week sprint that was marked by marathon hearings, late-night votes and hasty rewrites of key provisions.

Various GOP leaders have defended the process, but Representative Jim McGovern, a Democratic member of the Rules Committee, disputed their description of regular order. He said Republicans can ram their bill through Congress with the majorities they have, but he railed against GOP claims that the bill was discussed in an open, transparent way.

As an extra measure of satisfaction for Trump and congressional conservatives, the tax bill will dismantle a key piece of ACA: the individual mandate. GOP leaders say the mandate’s penalty—$695 for individuals—falls disproportionately on lower- and middle-income people.

Repealing the mandate is estimated to generate roughly $300 billion over 10 years, helping to keep the tax bill from creating even larger potential deficits. But that comes along with roughly 13 million people—most of them young and healthy—dropping insurance coverage over that decade, according to the Congressional Budget Office’s estimate.

Protesters in the House’s public gallery interrupted the last floor speeches and a procedural vote Tuesday, yelling, “Kill the bill, don’t kill us!”

Some health economists say the change would lead to higher health-coverage premiums, perhaps canceling out the effect of the individual tax cuts for many. Some GOP lawmakers, including Senator Susan Collins of Maine, are seeking legislation to help stabilize the situation, but the fate of those efforts remains unclear.

Bloomberg News