House and Senate Republican leaders have reached an agreement on a compromise tax bill, and they say they will forge ahead with a vote next week on the final plan despite objections from Democrats who demanded that the process be put on hold until Doug Jones, who defeated Republican Roy Moore in the closely watched Alabama senatorial election Tuesday night, can be sworn into office.
"Let's not waver now — let's not give in to the Washington status quo, not when tax reform is so close," House Ways and Means Chairman Kevin Brady exhorted his colleagues.
President Trump, in an afternoon speech, promised Americans “a giant tax cut for Christmas” and he once again falsely described the cuts as the largest ever. “If Congress sends me a bill before Christmas — this is breaking news — the IRS has just confirmed that Americans will see lower taxes and bigger paychecks beginning in February,” he said.
With the Deal Done, Tax Writers Held a Public Meeting
News of the deal came before the House and Senate conferees began their only public meeting on the bill, which quickly turned testy. “Let’s understand what’s happening today is a sham,” said Sen. Ron Wyden of Oregon, the top Democrat on the Senate Finance Committee. “Nobody ought to mistake this conference for real debate.”
What’s in the Final Tax Bill
The outlines of the agreement are reportedly still as we described them here yesterday. The plan would:
- Lower the top tax rate to 37 percent, down from the current 39.6 percent, with the threshold for that top bracket lowered from the $1,000,000 for married couples set in the House and Senate bills.
- Keep seven tax brackets, as in the Senate plan
- Allow homeowners to deduct interest on the first $750,000 of a new mortgage
- Allow taxpayers to choose to deduct up to $10,000 in state and local income, sales or property taxes
- Cut the corporate tax rate from 35 percent to 21 percent, a tick higher than the 20 percent rate included in the House and Senate bills, and have the new rate take effect next year, not 2019 as in the Senate bill
- Eliminate the corporate alternative minimum tax
- Provide a 20 percent deduction on pass-through business income, down from 23 percent in the Senate bill
- Repeal Obamacare’s individual mandate
The full details of the compromise will be released later this week. Lawmakers must still find out from analysts at the Joint Committee on Taxation whether the revisions will comply with budget rules that limit how much the bill can add to the deficit. And a small group of Republican senators, including Susan Collins of Maine, Ron Johnson of Wisconsin and Marco Rubio of Florida, could still look to exert some leverage over the deal by threatening to withhold their support, but it’s unlikely that the fast-moving tax cut train will get derailed at this point.