Senate Republicans passed a major overhaul of the tax code early Wednesday morning, bouncing the bill back to the House for one last vote before it is to be sent to President Trump’s desk for his signature.
The bill passed 51 to 48, along party lines, with Vice President Mike Pence presiding. Republican John McCain missed the vote while recuperating in Arizona.
"After eight straight years of slow growth and underperformance, America is ready to take off," said Senate Majority Leader Mitch McConnell.
With the Senate’s vote, passage of the $1.5 trillion tax cut is all but complete. The House voted Tuesday afternoon for essentially the same plan to reduce business and individual taxes.
The Senate had to make a few changes to the bill late Tuesday to allow it to pass under reconciliation rules, which allow passage by a simple majority vote. That means that House has to vote again on the Senate's slightly changed bill.
House Republicans shrugged off the need for the revote as a minor inconvenience on the way to fulfill their promise to revamp the tax code.
President Trump tweeted after the Senate vote that he plans to have a news conference at the White House Wednesday afternoon if the House goes through with passage as expected.
The United States Senate just passed the biggest in history Tax Cut and Reform Bill. Terrible Individual Mandate (ObamaCare)Repealed. Goes to the House tomorrow morning for final vote. If approved, there will be a News Conference at The White House at approximately 1:00 P.M.— Donald J. Trump (@realDonaldTrump) December 20, 2017
The measure would be the most consequential change in federal taxation since former President Ronald Reagan’s 1986 tax reform legislation. The crown jewel of the bill is a cut in the corporate tax rate from 35 percent to 21 percent, but it would also create a special new tax break for businesses that file through the individual side of the code and revamp taxation of foreign profits.
On the individual side of the code, the top individual tax rate would fall from 39.6 percent today to 37 percent. To partially pay for those tax cuts, it would eliminate or scale back roughly $3.5 trillion of existing tax breaks.
In addition to the tax overhaul, the bill will deliver on two other major GOP priorities by zeroing out Obamacare’s individual mandate penalty and opening up the Arctic National Wildlife Refuge for drilling.
In one fell swoop, the legislation will provide three major legislative victories for McConnell, the Kentucky Republican who had come under criticism from House Republicans and Trump after earlier efforts to replace Obamacare faltered in the Senate.
As Republicans moved the bill toward passage Tuesday night, Democrats and independents used every opportunity to criticize it and slow it down.
“Today marks a great victory for the very wealthy campaign contributors who have contributed hundreds of millions of dollars over the years to the Republican Party,” said Vermont Sen. Bernie Sanders on the Senate floor. “Because these billionaires will see a huge tax break for themselves at the same time the deficit for this country is driven up about $1.5 trillion.”
Sanders, an independent who caucuses with Democrats and is their ranking member on the Budget Committee, successfully litigated the removal of several small provisions of the bill for conflicting with the arcane Senate rules guiding the process for the tax bill. One of the struck-down provisions was the bill’s name, the Tax Cuts and Jobs Act, forcing Republicans to use a more unwieldy alternative.
The small changes won’t have any significant impact on the overhaul. But they did force House Republican leaders to call in their members to vote a second time on the tax bill so that the two chambers’ versions are exactly the same.
“If there’s anything better than voting for tax cuts once, it’s doing it twice,” said House Ways and Means Committee Chairman Kevin Brady, R-Texas, speaking Tuesday evening on Fox Business. “So this is not a problem.”
On Tuesday night, moderate Democrats, whose votes Trump has courted, denounced the bill in harsh terms.
“The bill in front of us is the product of dysfunction, partisanship, and political desperation,” said Montana Sen. Jon Tester, one of the Democrats up for re-election in 2018 in a state won by Trump.
“Our kids and our grandkids will be paying the bill for this tax cut that puts money in the pockets of the very, very wealthiest. That is almost beyond belief,” said Indiana Sen. Joe Donnelly, whose state both Trump and Pence visited in September to try to win his vote.
As the vote wrapped up late at night, protesters in the Senate gallery began chanting "kill the bill — don't kill us" and calling on individual Republicans to vote against the bill. Pence ordered them removed.
At the heart of the Democratic criticism of the bill is its tax reductions for high income earners and corporations, while at the same time containing only temporary tax cuts for individuals.
On the Senate floor, Ohio Democrat Sherrod Brown cited the Tax Policy Center, a nonprofit think tank, that said in 2027, when almost all the individual cuts will have expired, 83 percent of the bill’s remaining cuts would go to the top 1 percent of taxpayers.
Republicans countered that they wanted all the tax cuts to be permanent, and only failed to do so because Democrats didn’t join them. The same budget rules that allowed them to bypass the filibuster also limited them to a net tax cut of $1.5 trillion over 10 years, although they could have set that ceiling elsewhere.
Mostly, the bill is a bet by Republicans that the lower corporate tax rate and other reforms will kick the U.S. economy into higher gear, providing big wage increases for workers and easing concerns about deficits, and possibly giving Republicans a boost in the 2018 mid-terms.
But GOP lawmakers are also counting on future congresses to make the direct individual tax cuts permanent. “I want to work with them to make sure that it is permanent. We should be able to do that,” said Sen. Pat Toomey, R-Pa., in a floor speech.
But Toomey didn’t shy away from the fact that they party is cutting taxes for high earners.
“I don’t apologize for that,” he said. “I’m in favor of lowering the tax burden on everyone.”