House Republicans passed their version of legislation to overhaul the U.S. tax code by slashing the corporate tax rate, lowering tax burdens for most individuals and adding an estimated $1.4 trillion to the federal deficit over the next decade.

The vote Thursday represents a key milestone in President Donald Trump’s quest to cut taxes for businesses and individuals, although challenges remain for the GOP’s far-reaching tax plans to fundamentally reshape the U.S. economy. The Senate is debating its own separate plan, and it isn’t yet clear the chamber will have enough votes to pass it.

The Tax Cuts and Jobs Act (H.R. 1), passed the House in a 227-205 vote. Thirteen Republicans voted against it; all but one of them represent high-tax states that have the most to lose from provisions that would eliminate individual deductions for state and local income taxes.

Studies have shown that many of the tax bill’s benefits would go to the highest earners, and some middle-class taxpayers might actually pay more.

The United States Capitol building in Washington DC
Wasin Pummarin

Conservatives lauded Thursday’s vote, a crucial step toward a much-needed win for Republicans after almost a year of unified government with no major legislative victories. The bill’s backers say its cuts would spur enough economic growth to offset the measure’s $1.4 trillion cost, as estimated by Congress’s Joint Committee on Taxation. The JCT hasn’t yet released cost estimates that would account for macroeconomic changes.

Republican leaders in the Senate face tougher hurdles—both political and fiscal—than their counterparts in the lower chamber.

Republicans control only 52 of the chamber’s 100 seats and must produce legislation that meets far stricter fiscal constraints. The Senate Finance Committee is already proposing measures that would make benefits for individuals—including the middle class—temporary as leaders try to avoid adding to deficits beyond a 10-year budget window.

Senate Majority Leader Mitch McConnell praised the House vote and said Senate tax writers “are also making real progress on a bill that’s been years in the making to fulfill our promise to the American people.”

The Senate plan also departs from the House bill by delaying the corporate tax-rate cut by one year. And it includes a proposal to repeal a key provision of the Obamacare law—saving the government $318 billion over 10 years to help pay for the tax cuts, but leaving 13 million Americans uninsured by 2027, according to official estimates.

Many of the Senate provisions are designed to cut the bill’s cost and meet budget rules that will allow GOP leaders to pass a bill with only Republican votes. Differences between the House and Senate legislation will have to be worked out between the chambers -- and then both the House and Senate will have to approve the final result.

House Ways and Means Chairman Kevin Brady said he’s going to focus on preparing for a conference committee with the Senate. He added that lawmakers were working to improve provisions related to international taxation, address specific industries’ concerns and try to work with lawmakers from high-tax states.

President Trump said he would turn to cutting welfare spending after tax legislation is completed, according to House Republicans who were present for his remarks Thursday.

Trump said the administration will pivot to welfare programs next year, said Steve Womack of Arkansas and Matt Gaetz of Florida. Tax legislation in the House and Senate is estimated to reduce federal revenue by at least $1.4 trillion over the next decade.

During the campaign, Trump promised that he wouldn’t cut Social Security, Medicare or Medicaid.

Tom Cole of Oklahoma said the president didn’t lay out whether he preferred the Senate proposal or House bill, and didn’t discuss whether a final bill should include a repeal of the Obamacare individual mandate. Trump tweeted his support of including the repeal in a tax overhaul earlier this month.

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