In a high-stakes party-line vote, the Republican-controlled House passed a sweeping overhaul of the tax code Thursday that dramatically cuts the top corporate rate and lowers rates for individuals and families while taking away deductions and credits.
The 227-205 tally was a victory for House Speaker Paul Ryan, R-Wis., who needed to show his party could deliver on a major campaign promise and produce a significant legislative win for President Trump. But House passage is only the first step in what could be a tough and combative process.
White House press secretary Sarah Huckabee Sanders hailed the House vote as a "big step forward fulfilling our promise to deliver historic tax cuts for the American people by the end of the year."
"A simple, fair, and competitive tax code will be rocket fuel for our economy, and it’s within our reach," Sanders said in a statement. "Now is the time to deliver."
Whether Thursday's vote is a sign that one-party government under Trump has started to click — or whether it's a pyrrhic victory that founders in the Senate like the GOP's earlier attempt to repeal and replace the Affordable Care Act — will be decided in coming weeks.
Senate Republicans are drafting a bill with divergent individual tax rates, business rules and phase-outs. They also added a provision to repeal the Obamacare individual mandate, complicating the politics and the policy of their proposal.
Oregon Sen. Ron Wyden said tax policy is "tedious stuff" that doesn't always capture the public's attention, but health care resonates. "Now that they have made this a health care issue, I can tell you we’re hearing from grass-roots groups all over this country,” Wyden, the top Democrat on the Senate Finance Committee, told reporters.
Republicans in the Senate hold just 52 seats, meaning they can afford to lose just three votes if all Democrats vote against it. Already Sen. Ron Johnson, R-Wis., said he cannot vote for the current plan, and a few other GOP senators have raised concerns about elements of the Senate package.
Senate GOP leaders plan to bring their tax bill to the floor the week after Thanksgiving. The House and Senate will then have to reconcile their competing bills — and pass a final compromise through each chamber again. The House is only scheduled to be in session for 12 more days in 2017, and the Senate has 16 days left on its legislative calendar.
That leaves lawmakers little time to hash out an agreement on a complex and contentious piece of legislation. The tax bill will have to compete with other priorities, including a must-pass spending bill to keep the government open past Dec. 8, when current funding will run out.
In the middle will be Trump, who has proved to be an unpredictable and easily distracted ally for congressional Republicans. During the health care debate, the president hailed the House GOP proposal to replace Obamacare, only to call that bill "mean" when the Senate took up the issue.
That may give some Republicans pause as they negotiate key details of the tax bill and take heat from Democrats gunning to pick up seats in the 2018 elections. Democrats have so far remained united in their opposition to the tax overhaul, forcing the GOP to walk a political tightrope as they try to minimize defections within their own ranks.
In the House, Ryan was able to keep his fractious GOP conference mostly unified, although 13 Republican lawmakers voted against the tax bill Thursday. Most of those bucking the GOP leadership were from New York, New Jersey and California, high-tax states whose residents would be hit by the bill's scaled-down deduction for state and local taxes.
"The country needs a pro-growth re-write of the tax code but this bill will hurt New Jersey families who already pay some of the highest income and property taxes in the nation!" New Jersey Republican Rep. Rodney Frelinghuysen tweeted after the vote.
Before the vote, House Republicans met with Trump, who traveled the country this summer promising “massive” tax cuts for the middle class that would spur companies to expand and hire. Lawmakers said the president didn’t get into any policy specifics Thursday and only made passing reference to the differences between House and Senate proposals.
“He did complain to that it’s not bipartisan,” said Rep. Fred Upton, R-Mich.
During a sharply partisan floor debate Thursday, proponents of the House tax bill argued it would boost to the economy and provide relief to middle-class families.
"Passing this bill is the single biggest thing we can do to grow the economy," Ryan said in his closing pitch. "This plan is good for people of all walks of life."
The independent scorekeeper for tax bills, the Joint Committee on Taxation, said that a plurality of people at every income level would pay less under the bill. But within each income group, some people would see minimal change, and some who would pay more, especially after five years, when some new credits are set to expire.
For those making $50,000 to $75,000 in 2023, for example, JCT said 36% would get a tax break of $500 or more and another 19% would get a break of $100-$500. But 19% would pay within $100, plus or minus, what they pay now, 11% would pay $100-$500 more, and 15% would pay an extra $500 or more.
Rep. Kevin Brady, R-Texas a key author of the legislation, said the measure would also stop American companies from moving their operations offshore.
"With some of the highest tax rates in the world for our businesses, we’re seeing good-paying American jobs and manufacturing plants move overseas — one after the other," Brady said as debate began Wednesday night. "We have an opportunity to change all this."