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House clears GOP tax overhaul for Trump’s signature

Republicans say legislative win will resonate with voters in 2018.

Updated

President Donald Trump is poised to sign a historic tax overhaul bill after the House and Senate gave it their final blessing Wednesday, a moment years in the making for Republicans that lets Trump fulfill a key campaign promise.

Republicans will now have to sell the bill to what polls show is a skeptical public, as they try to turn the legislative victory into a major political asset for the 2018 mid-term election.

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The House passed the legislation 224-201, its second vote on the bill in as many days after Republicans had to remove education-related provisions that violated Senate budget rules. The Senate approved the legislation early Wednesday morning.

Supporters say the $ 1.5 trillion legislation – which includes steep individual and business tax cuts along with other changes to U.S. tax law — will broadly boost the U.S. economy and lift household finances at the same time.

“The key question here is does America continue to settle for slow growth and paychecks that never seem to grow, or do we make America competitive again?” House Ways and Means Committee Chairman Kevin Brady (R-Texas) said. “This lets our families and small businesses keep more of what they earn so that their communities and our country can grow again. This is a bold reform that shakes America out of its doldrums and gets our jobs coming back to America.”

But Democrats are determined to make the legislation an anchor that they say will help drag down Republicans in 2018. They argue the bill is a giveaway to the rich – including the entire Trump family — and profitable corporations, while it will do little or nothing for the middle-class and low-income Americans.

“They’re putting this on the credit card, $ 2.3 trillion in borrowing for the purpose of cutting the top tax rate from 39.6 percent to 37 and calling it middle-class tax relief,” said Rep. Richard Neal of Massachusetts, the top Democrat on the tax-writing Ways and Means panel. “It’s nonsense.”

Exactly when Trump will sign the bill was an open question Wednesday. National Economic Council Director Gary Cohn suggested that Trump could hold off until Republicans waive a mandatory budget rule that would require cuts to Medicare and other government programs due to the deficit increase caused by tax cuts.

If Republicans are able to waive the rule in year-end funding legislation lawmakers are expected to turn to next, “we will sign the tax bill this year,” Cohn said at an event hosted by Axios.

White House Press secretary Sarah Huckabee Sanders said there would be a “bill passage event” at the White House at 3 p.m. with members of the House and Senate.

“This is not a signing event as the bill would still need to be enrolled and that will happen at a later date,” she said.

Donald Trump Jr. is pictured. | Getty Images

Trump hailed the legislation on Twitter Wednesday morning while taking a shot at critics.

“The Tax Cuts are so large and so meaningful, and yet the Fake News is working overtime to follow the lead of their friends, the defeated Dems, and only demean,” he wrote. “This is truly a case where the results will speak for themselves, starting very soon. Jobs, Jobs, Jobs!”

Sharply cutting the corporate tax rate is a central part of the plan. Corporations will face a 21 percent statutory tax rate starting in 2018, down from 35 percent, and most non-corporate businesses organized as “pass-throughs” will get taxed at less than 30 percent. Pass-throughs pay taxes on the individual side of the tax code and range from corner groceries to the Trump Organization.

Multinational corporations would get a long-sought change in the way their overseas profits are taxed. They will now only pay taxes in the country where their profits are booked, instead of facing a U.S. tax on top of that.

But they will also be required to bring home some of the money they have already built up abroad, at a one-time tax rate of 15.5 percent.

Changes for individuals include lower rates for each of the seven brackets, topping out at 37 percent, a doubled standard deduction and a boost in the child tax credit, though all on a temporary basis. Republicans insist those tax benefits will ultimately be extended.

President Donald Trump is pictured. | AP Photo

But there are also new limits on longstanding breaks for homeowners and people who live in high-cost parts of the country, which will pare how much they can deduct in interest on their home loans and state and local taxes.

Overall, an average family of four earning median family income will get a $ 2,059 tax cut next year, according to House Speaker Paul Ryan (R-Wis.).

“That’s real money for real people who are really struggling,” Ryan said on Fox News.

Democrats and progressive groups scoff at that claim and have released a torrent of data in the past few weeks that they said proves middle- and lower-income people would be the least likely to benefit from the tax cuts while the major benefits flow to the rich and corporate titans.

Public polling indicates the Democrats’ message may be getting through, with few Americans believing they will benefit much, if at all.

But Senate Majority Leader Mitch McConnell said Republicans are confident those perceptions will turn around once the legislation starts taking effect and puts more money in peoples’ pockets.

“If we can’t sell this to the American people we ought to go into another line of work,” he said after the Senate passed the bill. “We believe that this is something the American people will respond to positively.”

He and Ryan expect the tax cuts to pay political dividends for Republicans heading into the midterm elections next year – and damage recalcitrant Democrats who voted against the legislation.

“The progressive left has gripped their party…,” Ryan said on Fox. “I do think this is not in their interest, not just politically, but just economically speaking.”

The fight is also likely to continue in Congress.

Democrats plan to push targeted bills aimed at undoing certain parts of the legislation rather than blanket repeal approaches, which House Republicans did more than 50 times with Obamacare repeal votes.

“I think the notion that there will just be technical changes is wrong,” said Rep. Sander Levin, a veteran member of the tax-writing Ways and Means Committee. “We’re going to be in a major battle over this bill.”

Neal admitted Democrats would eventually have to lend a hand on major revenue shortfalls if they arise, particularly from people exploiting the new pass-through provisions, as Democrats predict.

“I think we have to wait and see after there’s an acknowledgment on their side that it didn’t work,” Neal said.

The tweaks that required the second House vote offer ammunition to Neal, Levin and other Democratic critics who have charged that Republican haste to pass the bill in less than two months means that flaws will have to be fixed for years to come.

Colin Wilhelm contributed to this report.

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