The US Senate is close to a final vote on the Republican tax bill -- here's what to expect

  • The Senate is expected to vote on the Republican tax plan in the next 24 hours.
  • The plan would dramatically reshape the US tax code for businesses and individuals.
  • Prospects for the bill’s passage have improved dramatically.

As the Senate continues debate the Republican bill to overhaul the US tax code, many details have not been finalised – but passage appears closer than ever.

The Tax Cuts and Jobs Act (TCJA) would slash taxes on corporations while giving benefits to various industries as well.

For individuals, most Americans would get a tax cut, and all income groups would get a cut on average. But, it would also increase taxes on millions of tax filers and the individual cuts would expire after 2025 absent subsequent legislation.

A vote on the bill is expected some time late Thursday or early Friday, as GOP leaders try to win over a few more Republican members to vote for the bill. Currently, lawmakers are adding amendments to the bill, with Democrats hoping to slow its progress and Republicans trying to push the bill through.

If you’re just now catch up to the Senate’s debate on the TCJA, check out the quick catch on the tax bill below and catch all of our coverage here.

And follow along here for live coverage as it heads to a vote.

What’s in the bill?

The TCJA contains substantial changes to both the business and individual side of the tax code. In total, the Joint Committee on Taxation estimates the bill will cause the federal deficit to increase by just over $US1.4 trillion in the 10 years after is passes.

The business side

Perhaps the biggest change, on a macroeconomic level, would come from the slashing of the federal corporate tax rate. The current bill will bring down the rate to 20% from the current 35% starting in 2019. It would also require companies to repatriate assets, or bring back assets that are domiciled overseas, at a lower rate.

While the GOP has painted its tax bill as a simplification of the code, there remain still a bevy of quirks and cutouts in their bill. There’s a special tax cut for craft beer brewers, a tweak to clarify the code for private jet operators, and even a benefit for a fish processing plant in Pago Pago, the capital of American Samoa.

The bill also provides a benefit for so-called pass through businesses. These are businesses like limited liability corporations in which the owner takes the profits as income. In the bill, pass-through businesses would get a 17.4% deduction on their profit, but there is talk of raising this to 20% or more to win over Republican hold outs.

The individual side

The Senate TCJA would adjust the seven individual tax brackets in order to lower the rate on most Americans. (See a full breakdown of the new brackets here.) The bill would also double the standard deduction for all households and increase the child tax credit to $US2,000.

A slew of itemized deductions would also be eliminated, the alternative minimum tax would be repealed, and the threshold for the estate tax would be increased from $US5.6 million to around $US11 million.

Due to Senate rules, the bill would sunset all of its individual tax provisions after 2025. So the brackets would snap back to the current baseline.

The bill also would eliminate Obamacare’s individual mandate for all people to buy health insurance. According to the Congressional Budget Office, this would leave 13 million more people without coverage in 10 years compared to the current system and cause health premiums to spike another 10% above the current trajectory.

How will it affect me?

The TCJA would affect different people depending on how they file their taxes.

According to the most recent analysis by the Joint Committee on Taxation, 61.7% of Americans would get a tax cut of $US100 or more in 2019 if the TCJA passes, while 30.2% would see a change of less than $US100 to their tax bill.

Some people, however, would see their taxes increase. According to the JCT analysis, 8.1% of Americans would see their taxes go up by $US100 or more in 2019. This group would increase as time goes on – in 2023, 13.1% of people would see an increase.

(Business Insider’s Lauren Lyons Cole broke down how some people’s taxes will change in 2018ยป)

According to the JCT, after the individual changes expire, the increases would be significant. In 2027, the report said, 22.9% of people would see their taxes hiked, and 61.2% would see no change.

Other groups, like the Tax Policy Center, also agreed that most people would get a tax cut and each income bracket would on average get a cut. The groups also found that the tax bill would tilt toward wealthier Americans in the latter years and result in many middle-class Americans seeing a tax increase.

A variety of groups would benefit from or be penalised by the plan. People in states with high local taxes, such as New York and California, could get dinged because of the repeal of the state and local tax deduction. And those that rely on certain itemized deductions could see a tax bill increase, too.

How will the bill pass?

GOP leaders only have to win over members of their own party, since the TCJA is going through the process known as budget reconciliation.

The process allows bill to avoid a Democratic filibuster and be passed with a simple majority vote. This means Senate Majority Leader Mitch McConnell only needs 50 of the 52 Republicans senators to vote for the bill, since Vice President Mike Pence can cast a tiebreaking vote.

It also means that the TCJA is subject to a provision known as the Byrd rule, which applies guardrails to legislation going through the reconciliation process.

The Byrd rule mandates that all provisions in the bill must apply to the federal budget, which eliminates extraneous provisions. Additionally, the bill can only add a certain amount to the federal deficit – in this case $US1.5 trillion – in the first 10 years and no additional debt to the baseline after a decade.

The Senate parliamentarian, who determines whether the bill follows the reconciliations rules, has so far not released a public ruling on the TCJA.

Will the bill pass?

The prospects for the TCJA are looking increasingly positive.

At the start of the week, as many as 10 Republicans had concerns, but a few of those members have come around.

Republican sceptics like Sens. John McCain and Lisa Murkowski both said they are now supporting the bill.

Additionally, a number of sceptics such as Bob Corker, Ron Johnson, and Susan Collins appear to be softening on their stances against the bill while still demanding some changes. Here’s a quick rundown of the GOP holdouts and what they want:

  • The Deficit Group (Bob Corker, Jeff Flake): Both Corker and Flake are worried about the bill’s potential effects on the deficit and debt.
  • The Maine Moderate (Susan Collins): Since the TCJA repeals Obamacare’s individual mandate, Collins said she wants the Alexander-Murray Obamacare stabilisation package to be passed in conjunction with taxes. Also, Collins says the bill must include the ability for people to deduct up to $US10,000 in state and local property taxes from their federal burden.
  • The Small Business Group (Ron Johnson, Steve Daines): These two want a more generous benefit for pass-through businesses, which they say will make sure small businesses get the same boost as large corporations.

When is this going to happen?

Chip Somodevilla/Getty ImagesSenate Majority Leader Mitch McConnell

The Senate is currently debating the TCJA for 20 hours, split evenly between Republicans and Democrats.

Following the debate, members can offer as many amendments as they want in what is known as a vote-a-rama. Typically, the party not in power (Democrats in this case) offer a slew of symbolic amendments to force the party in power (Republicans) to take seemingly politically toxic positions.

While McConnell has not laid out an exact timeframe for a final vote, it looks likely that it will come late Thursday or early Friday.

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