By Lisa Mascaro
Tribune Washington Bureau
WASHINGTON, D.C. — Key holdouts on the GOP tax bill fell in line Friday, boosting momentum for passage as Republicans released the final version of their tax overhaul ahead of next week’s expected vote.
Leaders won over Sen. Bob Corker, R-Tenn., who had been the lone GOP opponent in the Senate of the $1.5 trillion package earlier because he feared it added too much to the deficit.
And negotiators satisfied Sen. Marco Rubio, R-Fla., by slightly expanding a child tax credit to help working-class families.
The new support makes passage of President Donald Trump’s top year-end priority, which was in jeopardy amid prolonged GOP infighting, more likely. Voting could begin on Tuesday.
“Every bill we consider is imperfect and the question becomes is our country better off with or without this piece of legislation,” Corker said in a statement. “I think we are better off with it.”
It did not appear that Corker demanded changes, as others have, before giving his backing. Rubio had threatened to vote against the measure Thursday unless the child tax credit provision was enhanced his office said he would now support it.
White House press secretary Sarah Sanders said Trump “greatly appreciates” support from Corker, who called the president.
The final bill includes several compromises that forced Republicans to scale back on aspirations to vastly lower individual rates and create a simpler code that would allow Americans to file returns on a postcard.
The bill permanently lowers corporate rates from 35 percent to 21 percent. It drops rates for many individuals, too, but those cuts will expire in 2025.
The new top individual rate, 37 percent, will kick in at annual income levels of around $500,000 for individuals and $600,000 for couples, slightly above today’s $470,000 threshold for the top 39.6 percent rate. But that income level is far from the $1 million cutoff once envisioned by Republicans, who face criticism that the bill favors the wealthy and corporations.
The bill keeps seven individual brackets, but with revised rates and incomes levels that Republicans say should result in lower taxes for many Americans.
But several studies have found those savings will fade out over time, particularly after the individual rates expire.
The package, drafted without Democrats, fundamentally changes the tax code by repealing many popular deductions, including capping the state and local tax write-off at $10,000 and limiting mortgage interest deductions to loans up to $750,000. Those changes are likely to hit hardest in high-cost states, where property and state income tax deductions are widely used.
It doubles the standard individual deduction to $24,000 for couples, but also does away with the $4,050-per-person personal exemption used by many Americans to lower their tax bills.
The bill will retain the estate tax on the wealthy — something that Republicans had long wanted to kill. But it will double the exemption to $22 million. It also repeals the so-called alternative minimum tax for businesses, but retains it for individuals with a higher income threshold.
On the business side, negotiators Friday pushed the corporate repatriation rate to 15.5 percent on firms that bring overseas profits back to the United States, higher than the 10 percent rate once envisioned, or 14 percent in an earlier compromise, as they searched for additional revenue to cover the costs of other changes.
Final negotiations also abandoned several high-profile GOP provisions that ran into steep resistance. Among those things not included in the final bill is the proposed taxation of in-kind tuition payments for graduate students and the proposed repeal of deductions for private activity bonds used by municipalities to finance public projects. Deductions for student loan interest, also once targeted for elimination, were preserved.
The package keeps in place a decades-old tax rule Republicans had wanted to repeal, the so-called Johnson amendment, which limits the ability of churches and nonprofits to engage in political activity.
Winning back support from Rubio and Corker was crucial as Republicans can lose no more than two votes for passage in the Senate, where they have a narrow 52-48 majority.
Other GOP potential holdouts have not yet announced their support. Additionally, Sen. John McCain, R-Ariz., has been absent as he is being treated for cancer, though others said he and Sen. Thad Cochran, R-Miss., who has been recuperating from outpatient treatment, are expected to vote. Vice President Mike Pence will be on hand next week in case he is needed to break a tie.
Negotiators met Friday morning to finish the bill before its release, and said they were optimistic they had the votes for passage in the House and Senate, meeting Trump’s push for completion by Christmas.
“I’m confident both chambers will pass it next week,” said Sen. Pat Toomey, R-Pa.
Rubio’s office confirmed his support. “For far too long, Washington has ignored and left behind the American working class,” Rubio tweeted, calling the changes “a solid step toward broader reforms.”
The change will increase the refundability of the child tax credit, which Rubio and Sen. Mike Lee, R-Utah, had been able to increase from $1,000 to $2,000 per dependent under the bill, allowing as much as $1,400 to be refunded to working-class Americans if they don’t owe beyond their payroll taxes. Earlier, just $1,100 would have been refunded.
Rubio had argued that was unfair to low- and moderate-income workers who might not pay enough in taxes to take full advantage of the credit.
Republicans are trying to pass the bill on their own, without Democrats. Critics say it still leans too heavily in favor of corporations and the wealthy without much improvement for middle-class Americans.
The bill allows a new 20 percent deduction on the first $315,000 of income for so-called pass-through businesses, including mom-and-pop shops, but also bigger firms that organize as sole proprietors, as Trump does.
It also includes a provision to open part of the Arctic National Wildlife Refuge to oil and gas drilling, which has been a priority for Sen. Lisa Murkowski, R-Alaska.
And it would repeal in 2019 the requirement under the Affordable Care Act that all Americans have health insurance.
Deductions for medical expenses — which were eliminated in earlier versions — will be preserved, but with limitations.
Despite polling showing the bill is unpopular among Americans, Republicans remained confident it will gain support once the cuts are implemented.
“The benefits will go primarily to people in the middle class,” said Sen. Rob Portman, R-Ohio. “The burden of taxation will continue to be much like it is now. In other words, it’s a progressive tax code. You make more money, you pay more in taxes.”
