WASHINGTON – Republicans plan to put a bill to overhaul the U.S. tax system to a vote in the House of Representatives next week, a senior lawmaker said on Tuesday as a top ratings agency predicted the tax cuts would clear Congress but balloon the federal deficit.
Facing pockets of discontent in their own ranks, Republican tax negotiators in the House are seeking to resolve differences over the legislation this week and stick to a self-imposed deadline of passage this month.
“We’ll bring it to the floor next week,” House Ways and Means Committee Chairman Kevin Brady told Fox News. “Our goal is to pass it next week out of the House.”
The tax plan, if it gets through the Republican-controlled House, would likely face a more serious challenge in the Senate, where the party only has a majority of 52-48 votes and may need help from Democrats.
If enacted, the tax plan would be the biggest restructuring of the U.S. tax code since the 1980s and the first major legislative victory of Donald Trump’s presidency.
Fitch Ratings predicted on Tuesday that some sort of Republican tax plan would get through both chambers of Congress, but it would give only a short-lived boost to the U.S. economy and add significantly to the federal debt burden.
“Such reform would deliver a modest and temporary spur to growth, already reflected in growth forecasts of 2.5 percent for 2018. However, it will lead to wider fiscal deficits and add significantly to U.S. government debt,” Fitch said, revising its medium-term debt forecast higher.
It said the United States’ debt-to-GDP ratio would rise substantially to 120 percent by 2027.
Republicans are proposing a range of tax cuts, including slashing the corporate rate to 20 percent from 35 percent, establishing a new 25-percent rate for “pass through” businesses, and creating new tax brackets for individuals and families.
Trump and his Republican allies in Congress argue the tax cuts are needed to boost economic growth and create jobs.
Democrats have condemned the plan as a giveaway to the rich and say that many middle-class Americans will be hurt by the elimination of popular tax deductions, such as the one for state and local income tax payments.
Thomas Barthold, head of the nonpartisan Joint Committee on Taxation, which assists congressional tax writers, testified on Capitol Hill on Monday that the proposed tax bill could result in higher tax bills beginning in 2023 for as many as 38 million people who make between $20,000 and $40,000 per year.
Republican leaders have pushed for the House to vote on the tax bill before the U.S. Thanksgiving holiday on Nov. 23 and the party’s lawmakers are revising the proposal this week.
FLURRY OF AMENDMENTS
Brady offered a sweeping amendment on Monday that tweaked at least half a dozen provisions of the 429-page draft tax bill.
One was a proposal related to carried interest income, which would lengthen to more than three years from one the amount of time Wall Street financiers must hold assets in order to be eligible for a lower, capital gains tax rate.
The amendment would reduce the amount of carried-interest income eligible for the lower rate.
Brady’s amendment also tweaked, but did not substantially revise, a proposed 20 percent tax on cross-border transactions between related business units, which caught multinational companies by surprise last week and sent them scrambling to figure out its implications.
Rather than waiting to see how the tax bill will fare in Congress, some investors are already carefully selecting technology, healthcare and consumer companies they expect to use potential tax savings to buy back more of their own stock.
Additionl reporting by Richard Leong and David Randall in New York; Writing by Alistair Bell; Editing by Kevin Drawbaugh and Paul Simao