House Will Need to Re-Vote on Tax Overhaul

WASHINGTON (CN) – House Republicans were caught up short Tuesday afternoon when they learned the chamber will have to vote again on the $1.5 trillion tax code rewrite it had just passed because the measure as written would violate Senate rules.

House Speaker Paul Ryan and his Republican colleagues were jubilant Tuesday after the bill cleared the House 227-203 Tuesday afternoon, just four days after the final version on the bill was unveiled last week. The Senate was expected to pass the measure Tuesday night and send it on to the White House for President Donald Trump’s signature.

It will now take at least another day for the bill to reach the president’s desk. The House will have to vote again on the legislation once it’s been amended and approved by the Senate.

Senate passage was expected Tuesday night or early Wednesday. GOP House Majority Leader Kevin McCarthy’s office says the House would reconsider the bill Wednesday morning and send it to President Donald Trump for his signature.

Democrats said the Senate parliamentarian had found three items that violated Senate rules. The problem was revealed by Vermont independent Sen. Bernie Sanders and Oregon Democrat Ron Wyden.

These included one provision that would let families use tax-advantaged 529 accounts for home-schooling expenses and two other parts of the bill violate the so-called Byrd rule. As a result, those provisions will need to be removed for Republicans to use the special procedure they are employing to pass the tax plan with just 50 votes.

The procedure, called reconciliation, comes with specific rules on how legislation can impact the budget. Senators could waive the rule and keep the provisions in, but would need 60 votes to do so, an unlikely outcome given Republicans’ slim majority in the Senate.

Though the new changes likely do not imperil the bill, the House would need to vote again on the legislation with the offending provisions removed.

The bill passed by the House Tuesday would slash the corporate tax rate from 35 percent to 21 percent while also lowering the rate for most individual tax brackets.

The bill repeals most itemized deductions, but unlike an earlier version, allows individuals to deduct up to $10,000 in state and local taxes. To offset the reduction in itemized deductions, the plan nearly doubles the standard deduction people can claim on their taxes and expands the Child Tax Credit.

The more generous Child Tax Credit was a late addition to the bill after Sen. Marco Rubio, R-Fla., threatened to vote against the plan if it did not include the expansion.

Republicans also added a provision repealing the federal health care law’s requirement that most people have health insurance, which the Congressional Budget Office found would lead to 13 million fewer people having health insurance by 2027, in large part because some people would choose to go without insurance.

The bill also opens up the Alaska National Wildlife Refuge for drilling.

The final version of the bill the House passed is the result of negotiations between House and Senate lawmakers after the two chambers passed slightly different versions of the same legislation earlier this month.

Republicans have hailed the legislation as an all-around tax cut that will increase economic growth. Democrats, however, note that most of the benefits of the bill will be realized by high-income earners.

Both parties have data to back their claims. A report from the Tax Policy Center released Monday found 80 percent of people – and 90 percent of the middle class – would pay less under the plan, with the average person seeing a $1,600 tax cut in 2018.

“Sometime in January, early February, it’s going to be pretty clear that no matter what people were saying, they benefitted from the tax bill that we hope to pass later today,” Sen. Roy Blunt, R-Mo., told reporters Tuesday.

However, the same report found the top one percent of earners next year would see a $50,000 tax cut, as compared to $900 for middle-income people. That disparity would grow if lawmakers allow the rate changes to expire in 2025, the analysis found.

The House passage sends the bill to the Senate, where GOP leaders are confident they have the votes to pass the legislation. The Senate voted 51-48 to proceed to the bill barely an hour after the House vote.

Unlike with the party’s failed attempts to repeal the Patient Protection and Affordable Care Act earlier this year, Senate Republicans have fallen behind the bill in recent days. Without the need for a vote from a single Democrat, Republicans appear all but assured to pass the first major tax change in decades.

“Thirty-one years is a long time, but we’re back with comprehensive tax reform,” Senate Majority Leader Mitch McConnell, R-Ky., told reporters Tuesday.

But the bill remains highly unpopular outside of the Republican caucus. A CNN poll released on Tuesday found 55 percent of adults oppose the bill, with just 33 percent supporting it.

This has lead Democrats to express optimism that the bill will sink Republican electoral chances next year, much as the unpopularity of the Affordable Care Act did for Democrats in 2010.

“Let me be clear, this tax bill will be an anchor around the ankles of every Republican,” Senate Minority Leader Chuck Schumer, D-N.Y., told reporters Tuesday. “They haven’t learned it yet, they’re going to learn it this November. Republicans will rue the day they passed this bill, the American people will never let them forget it.”

McConnell was confident, however, that Republicans will be able to swing public opinion about the tax plan.

“We’re confident this will work and we’re prepared to take that argument to the American people next fall,” McConnell said.

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