House of Representatives approves tax package, shifts fight to Senate

WASHINGTON, Nov 16 (Reuters) - The U.S. House of Representatives approved a broad package of tax cuts affecting businesses, individuals and families on Thursday, moving Republicans and President Donald Trump an important step closer to the biggest tax code overhaul in a generation.

The largely party-line 227-205 vote shifted the tax debate to the U.S. Senate, where that chamber's separate plan has already encountered resistance from some Republicans. No decisive Senate action was expected until after next week's Thanksgiving holiday.

Trump, who is looking for his first major legislative win since he took office in January, went to the U.S. Capitol just before the vote to urge Republicans to pass the tax measure, which Democrats call a give-away to the wealthy and businesses.

RELATED: Trump talks about tax reform in Pennsylvania

12 PHOTOS
President Trump speaks about tax reform in Harrisburg, Pennsylvania
See Gallery
President Trump speaks about tax reform in Harrisburg, Pennsylvania
US President Donald Trump speaks on tax reform, at Harrisburg International Airport on October 11, 2017 in Middletown, Pennsylvania. / AFP PHOTO / MANDEL NGAN (Photo credit should read MANDEL NGAN/AFP/Getty Images)
U.S. President Donald Trump speaks about tax reform in Harrisburg, Pennsylvania, U.S., October 11, 2017. REUTERS/Joshua Roberts
U.S. Secretary of the Treasury Steven Mnuchin waits for U.S. President Donald Trump to speak about tax reform in Harrisburg, Pennsylvania, U.S., October 11, 2017. REUTERS/Joshua Roberts
U.S. President Donald Trump is obscured by a teleprompter as he speaks about tax reform in Harrisburg, Pennsylvania, U.S., October 11, 2017. REUTERS/Joshua Roberts
Director of the National Economic Council Gary Cohn speaks on a mobile phone as U.S. President Donald Trump speaks about tax reform in Harrisburg, Pennsylvania, U.S., October 11, 2017. REUTERS/Joshua Roberts
People listen as U.S. President Donald Trump speaks about tax reform in Harrisburg, Pennsylvania, U.S., October 11, 2017. REUTERS/Joshua Roberts
U.S. President Donald Trump speaks about tax reform in Harrisburg, Pennsylvania, U.S., October 11, 2017. REUTERS/Joshua Roberts
US President Donald Trump steps out of a limousine to board off Air Force One before departing from Harrisburg International Airport on October 11, 2017 in Middletown, Pennsylvania. / AFP PHOTO / MANDEL NGAN (Photo credit should read MANDEL NGAN/AFP/Getty Images)
US President Donald Trump speaks on tax reform inside a hangar at the Harrisburg International Airport on October 11, 2017 in Middletown, Pennsylvania. / AFP PHOTO / MANDEL NGAN (Photo credit should read MANDEL NGAN/AFP/Getty Images)
US President Donald Trump speaks on tax reform, at Harrisburg International Airport on October 11, 2017 in Middletown, Pennsylvania. / AFP PHOTO / MANDEL NGAN (Photo credit should read MANDEL NGAN/AFP/Getty Images)
U.S. President Donald Trump speaks about tax reform in Harrisburg, Pennsylvania, U.S., October 11, 2017. REUTERS/Joshua Roberts
US President Donald Trump speaks on tax reform, at Harrisburg International Airport on October 11, 2017 in Middletown, Pennsylvania. / AFP PHOTO / MANDEL NGAN (Photo credit should read MANDEL NGAN/AFP/Getty Images)
HIDE CAPTION
SHOW CAPTION
of
SEE ALL
BACK TO SLIDE

"Passing this bill is the single biggest thing we can do to grow the economy, to restore opportunity, to help these middle-class families that are struggling," House Speaker Paul Ryan told lawmakers before the vote.

Congress has not thoroughly overhauled the sprawling U.S. tax code since Republican Ronald Reagan was president. The House measure is not as comprehensive as Reagan's 1986 sweeping package, but it is more ambitious than anything since then.

The path forward for the tax plan in the Senate, where Republicans have a narrow majority, is fraught with political obstacles involving the federal deficit, health care and the distribution of tax benefits. Republicans can lose no more than two Senate votes.

Senate Republican tax writers made the risky decision to tie their plan to a repeal of the requirement for people to get healthcare insurance under former President Barack Obama's Affordable Care Act. That exposed the tax initiative to the same political forces that wrecked Republicans' anti-Obamacare push earlier this year.

The House bill, which is estimated to increase the federal deficit by nearly $1.5 trillion over 10 years, would consolidate individual and family tax brackets to four from seven and reduce the corporate tax rate from 35 percent to 20 percent.

It also would scale back or end some popular tax deductions, including one for state and local income taxes, while preserving a capped deduction for property tax payments.

Democrats have pointed to analyzes showing millions of Americans could end up with a tax hike because of the elimination of popular deductions. Repealing or cutting some deductions is a way to offset the revenue lost from tax cuts.

"It's a shameful piece of legislation, and the Republicans should know better," House Democratic leader Nancy Pelosi told lawmakers before the vote.

Investors have cheered the prospect of a tax overhaul and U.S. stocks padded their gains as theHouse vote came to a close, with the benchmark S&P 500 index up around 1 percent on the day.

Brian Battle, director of trading at Performance Trust Capital Partners in Chicago, said stocks' strong gains on the day were helped by the House vote.

"It's helping stocks now and the bond market's turned around," he said. "The tax plan isn't a foregone conclusion but it passed the lowest hurdle in the House. The even higher hurdle is to have something pass in the Senate."

ELECTION ISSUE

Republicans have long promised tax cuts and see enacting the legislation as critical to their prospects of retaining power in Washington in the November 2018 congressional elections, particularly after their failure to meet their promise to repeal Obamacare.

But it will be a challenge in the 100-seat Senate, where Republicans can lose no more than two votes from their 52-48 majority if they hope to enact tax reform.

The Senate version has already faced criticism from several Republican lawmakers, including Senator Susan Collins, who helped sink the Republican effort to repeal Obamacare.

Republican U.S. Senator Ron Johnson said Trump called him on Wednesday night after Johnson announced his opposition to the current Senate plan because of what he said were unequal rates for small businesses and non-corporate enterprises known as "pass-throughs," versus corporations.

Still, Johnson said he was hopeful a final bill could be passed by year's end.

"I'm trying to fix it, and I want to vote yes," Johnson told CNBC, adding Trump told him he would meet with Treasury officials on the issue.

Senator John McCain, a Republican who also voted against the healthcare overhaul effort this summer, and his colleagues Bob Corker and Lisa Murkowski, are considered critical votes along with Collins and Johnson.

Nonpartisan congressional analysts say the provision to repeal the health insurance mandate in the Senate version would drive up premium costs and cause some 13 million Americans to lose coverage.

The Senate plan also sets individual tax rate cuts to expire while reductions for corporations are permanent.

The House and Senate versions will eventually have to be reconciled before they can be sent to Trump's desk for his signature.

"We'll find a middle ground and we'll get it to the president's desk ... This is a big deal for us," Republican Representative Tom Cole told MSNBC.

(Reporting by David Morgan and Amanda Becker; Additional reporting by Susan Heavey, David Alexander and Katanga Johnson in Washington; Sinead Carew in New York; Writing by John Whitesides; Editing by Alistair Bell and Frances Kerry)

Tax Advantages to Incorporating

To be successful and hold the line financially, however, tax experts agree that even the smallest of businesses may benefit by incorporating.

Read More

Brought to you by TurboTax.com

How to Spend, Save, or Stretch Your Tax Refund

Looking forward to a large refund? That might mean your withholding is too high.

Read More

Brought to you by TurboTax.com

How to Use Your Lyft 1099: Tax Help for Lyft Drivers

Whether you drive for Lyft full-time or part-time, you’re now enjoying the pay, perks, and prerogatives of being self-employed—from setting your own hours to building customer relations. With the onset of tax season, you face a new business challenge: filing your taxes in a way that minimizes your tax liability. Follow these tips on how to use your Lyft 1099 to complete your tax return and maximize your tax deductions.

Read More

Brought to you by TurboTax.com

What Is the IRS Form 8283?

If the combined value of all property you donate is more than $500, you must prepare IRS Form 8283.

Read More

Brought to you by TurboTax.com
Read Full Story