(Bloomberg) — President Donald Trump signed the Republican tax overhaul bill to little fanfare on Friday, delivering a major tax cut to U.S. corporations along with a package of temporary cuts for other businesses and most individuals. Trump’s signature caps a seven-week sprint that began when the House unveiled its tax bill last month, and it gives the GOP its first major legislative victory since January.
Among the tax measure’s most controversial provisions are provisions that repeals the individual mandate of the Affordable Care Act, which in past years has required people to have insurance coverage or pay a penalty.
GOP leaders say the Obamacare mandate’s penalty—$695 for individuals—falls disproportionately on lower- and middle-income people. Repealing it is estimated to save the federal government roughly $300 billion over 10 years. But at the same time, about 13 million people are expected to drop their insurance coverage over the decade, according to estimates from the Congressional Budget Office. Some health economists say the change would lead to higher health insurance premiums.
The overall massive tax legislation bill hasn’t scored well in national polls, in part because of concerns about its benefits for corporations and top earners. But Trump and other Republicans say average Americans will embrace it.
The bill slashes the corporate tax rate to 21 percent from 35 percent and cuts individual tax rates across the board, although analyses have shown that most of the benefit would go to those at the top of the income scale. It also imposes new limits on deductions used heavily in high-tax states with high home values, meaning some people in those areas will see higher tax bills.
Trump highlighted corporate responses to the new law. AT&T said Wednesday that it would give a special $1,000 bonus to 200,000 U.S. workers to celebrate the tax cut. Boeing separately pledged $300 million for employee training, improved workplace infrastructure and corporate giving, crediting the new tax law.
Congress on Thursday night cleared the way for Trump to sign the bill by waiving automatic spending cuts that would have been triggered in January because of the $1.5 trillion revenue loss the bill would cause. The stopgap spending bill keeps the government open until January 19, waiving cuts in all future years under the 2010 PAYGO law.
Overall, the bill is projected to decrease federal revenue by almost $1.5 trillion over the next decade, although the individual tax cuts are set to expire in 2026 to avoid adding to the deficit outside that window. Trump and GOP leaders have said they expect the business tax cuts to spur enough economic growth to make up for the revenue loss, an assertion that many economists have questioned.
Trump has repeatedly described the plan as a boon for the middle-class—and the bill includes provisions that almost double the standard deduction and expand the child tax credit. Those measures will benefit millions of families, not just those in the middle class.
GOP leaders say a “typical family of four” that’s earning $73,000, the median family income in the U.S., would see a tax cut of more than $2,000 under the bill. But the bill also cuts the top marginal tax rate on households earning more than $600,000 a year, and provides a new tax break for owners of partnerships, limited liability companies and other so-called pass-through entities.