by Anna Edgerton

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.

Republican ‘Nos’

Ryan celebrated the vote total. “Getting 227 members to agree on something as complicated as the tax code is extraordinary,” he said.

Of the 13 Republican “no” votes, five are from New York, four are from New Jersey and three are from California -- the three states that are among the heaviest users of the state and local tax deduction. Many of those lawmakers are also expected to face tough reelection bids in 2018. 

The 13th GOP opponent was Representative Walter Jones of North Carolina. “My no vote is for the next‪ generation‪ so they won’t be bankrupt,” he said.

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. 

“A simple, fair, and competitive tax code will be rocket fuel for our economy, and it’s within our reach,” White House Press Secretary Sarah Huckabee Sanders said in a statement after the vote. 

Middle-Class Homeowners 

One of most vocal critics of the House bill -- the National Association of Realtors -- released a statement after the vote warning about its effects on home values. 

NAR opposes provisions in the House bill that would cap the mortgage-interest deduction at $500,000 worth of debt for new home purchases -- down from $1 million currently.

“Make no mistake: Middle-class homeowners will see their home values fall if this proposal moves forward, while large corporations walk away with the bulk of the tax cuts,” Elizabeth Mendenhall, the group’s president, said in an emailed statement. The group will focus on the Senate plan, which preserves the mortgage-interest cap, she said.

Republican leaders in the Senate face tougher hurdles -- both political and fiscal -- than their counterparts in the lower chamber.

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.

Senate Majority Leader Mitch McConnell praised the House vote and said Senate tax writers “are also making real progress on a bill that’s been years in the making to fulfill our promise to the American people.”

‘Not Last Step’

The Senate plan also departs from the House bill by delaying the corporate tax-rate cut by one year. And it includes a proposal to repeal a key provision of the Obamacare law -- saving the government $318 billion over 10 years to help pay for the tax cuts, but leaving 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. 

House Ways and Means Chairman Kevin Brady said he’s going to focus on preparing for a conference committee with the Senate. He added that lawmakers were working to improve provisions related to international taxation, address specific industries’ concerns and try to work with lawmakers from high-tax states. 

“This is certainly not the last step in our tax reform journey,” Brady said after the vote. But he pledged lawmakers will “make this better every step of the way.”

--With assistance from Erik Wasson, Colleen Murphy and Sahil Kapur.

To contact the reporter on this story: Anna Edgerton in Washington at [email protected]

To contact the editors responsible for this story: John Voskuhl at [email protected]

Alexis Leondis

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