House passes tax bill, focus turns to Senate

Tax reform legislation expected to have more of a challenge in upper chamber

Nov 16, 2017 @ 2:21 pm

By Bloomberg News

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 -- though challenges remain for the GOP's far-reaching tax plans to fundamentally reshape aspects of 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.

"We are in a generation defining moment for our country," House Speaker Paul Ryan said from the House floor before the vote. "What we're doing here is not just determining the kind of tax code we're going to have -- what we are doing here is determining the kind of country we're going to have."

"Under this plan, the average family at every income level gets a tax cut," Ryan said.

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.

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.

Focus now turns to the Senate, where Republican leaders will face tougher hurdles -- both political and fiscal.

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.

Other significant differences between the Senate plan and the House bill include a Senate proposal to delay the corporate tax-rate cut by one year. And a Senate proposal to repeal a key provision of the Obamacare law would save the government $318 billion to help pay for the tax cuts, but leave 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.

0
Comments

What do you think?

View comments

Recommended for you

Featured video

INTV

Advisers beware: tax law has unintended consequences

Commission accounts could be preferable for some clients, and advisers could be incentivized to move from employee broker-dealers to independent channels.

Recommended Video

Path to growth

Latest news & opinion

Lightyear Capital takes 50% stake in $9 billion HPM Partners

Private equity backing could fuel acquisitions by the large RIA.

Tax reform: 7 essential strategies for financial advisers

While advisers face the difficult task of analyzing the law's impact, they will also have a significant opportunity to prove their value by implementing money-saving strategies for clients as well as their own businesses.

Tax law: Everything advisers need to know about the pass-through provision

The provision is tricky, but could provide advisers and business-owner clients with sizable tax savings.

Bill requiring fiduciary disclosure reintroduced in New Jersey

Measures would obligate financial advisers to tell clients they do not have to act in their best interests.

Merrill Lynch to let advisers text with clients

Texting has been a popular mode of communication for years, but in the past the firm's regulations have prevented advisers from using it.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print