CRUNCH TIME: Republicans are set to close out their massive tax overhaul

  • The House is scheduled to vote on the final version of the Republican tax bill on Tuesday, with a Senate vote expected soon after.
  • The bill would substantially change the business and individual parts of the US tax code.
  • Republicans are likely to support the bill overwhelmingly in both chambers of Congress.

The House is scheduled to vote Tuesday on the final version of the Republican bill to overhaul the US tax code, kicking off a frantic rush to cement the bill into law before Christmas.

Republicans have pushed the Tax Cuts and Jobs Act, first introduced in the House about seven weeks ago, through Congress at lightning speed to meet a self-imposed end-of-year deadline.

The last version of the bill was finalised on Friday after a conference committee merged the versions passed by the two chambers into one conference report.

The vote in the House is expected in the early afternoon. If the bill passes, it will go to the Senate for a vote either late Tuesday or early Wednesday.

What’s in the bill?

Paul Ryan donald trumpWin McNamee/Getty ImagesRyan and President Donald Trump.

The bill would substantially overhaul the business and individual parts of the US tax code.

Large corporations would see their tax rate cut to 21% from the current 35%. And businesses would be able to fully deduct expenses immediately over the next five years.

Outside of the headline items, some industries, like craft brewers, would see significant adjustments and carve-outs to their tax bills.

Pass-through businesses, in which the owner books profits as personal income – such as a limited-liability corporation or S-corporation – would be allowed to deduct their first 20% of income attributable to the business.

The bill calls for certain restrictions for wealthier pass-through businesses to prevent those with few employees, like hedge funds, from unfairly benefitting.

On the personal side, most Americans would see an immediate tax cut. Those individual tax cuts, however, are set to expire after 2025 for the bill to comply with key Senate rules.

While Republicans have said a future Congress is likely to extend the cuts, critics of the bill say their planned sunset shows the bill prioritises corporations.

Overall, most independent analyses of the tax bill have found that it would give a small boost to the US economy and, on average, cut taxes for Americans at every income level.

But contrary to how Republicans have described the bill, no analysis has found that it would “pay for itself” by generating higher tax revenue from increased economic growth – most say it will add about $US1 trillion in new debt over 10 years.

Will it pass?

Bob corkerChip Somodevilla/Getty ImagesRepublican Sen. Bob Corker says he’ll vote for the bill.

The bill appears to have a fairly smooth path to passage.

In the House, a handful of Republican lawmakers have said they will vote against the bill. They are predominately from states like New York and California, where many residents are expected to lose a substantial amount of the benefit from the state and local tax deduction.

But just 13 Republicans voted against the bill when it first came through the House, and the GOP can afford to lose as many as 22 votes in that chamber.

The Senate will be slightly more complicated, said Isaac Boltansky, an analyst at the research firm Compass Point, but only because of technical rules.

The issue at hand is the so-called Byrd rule, which prevents lawmakers from adding provisions that don’t deal with the budget to legislation considered under budget reconciliation, the process the GOP is using to pass the tax bill.

Reconciliation allows Republicans to pass the bill with a simple majority. But it also means Democrats can challenge some of its provisions under the tightened rules.

“Debate in the Senate is limited to 10 hours, but Democrats are likely to use at least some of that time to procedurally challenge whether certain elements of the package conform to the Byrd Rule’s requirements,” Boltansky said in a note to clients Tuesday.

He added: “Democratic challenges could conceivably prove to be speed bumps in the GOP’s drive to tax reform in 2017, but our sense is that a material delay is highly unlikely.”

While technicalities could slow down the process, Republicans almost certainly have enough votes to pass the bill.

The absence of Sen. John McCain, who has returned to Arizona to receive treatment for complications stemming from brain cancer, whittles the GOP’s majority down to 51-48.

But key holdouts – including Republican Sens. Bob Corker, Susan Collins, Marco Rubio, and Mike Lee – have all said in recent days that they will vote for the bill, leaving Sen. Jeff Flake as the only Republican to not formally announce an intention to vote for it.

“We continue to believe that the president will sign the tax bill this week, which should provide members of both parties with wide latitude to use painful Christmas puns liberally,” Boltansky concluded.

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