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Trump Just Signed Republicans’ Massive Tax Overhaul Into Law

The law drastically reduces the tax rate paid by corporations.

Last updated on December 22, 2017, at 11:24 a.m. ET

Posted on December 19, 2017, at 2:29 p.m. ET

Mark Wilson / Getty Images

President Donald Trump signed the Republican tax plan — which would steeply and permanently reduce taxes for corporations, while temporarily cutting taxes for many individuals — into law Friday morning, two days after it finished its path through Congress.

Trump signed the legislation, along with a bill avoiding a government shutdown, without much in the way of celebratory fireworks from the Oval Office before leaving Washington, DC, for Florida.

"We were going to wait until Jan. 7 or 8 and do a big formal ceremony," Trump said before signing the tax bill, "but every one of the networks were saying 'Will he keep his promise?' and 'Will he sign it before Christmas?' And so I immediately called and said let's get it ready." He added that New England Patriots owner and billionaire Bob Kraft called him Thursday night "and said the tax bill is incredible."

"Corporations are literally going wild over this," he later added.

The law, released publicly just last Friday, is the end result of rapid action in Congress over the last month and makes big changes across the tax code.

The plan — which maintains the same number of income tax brackets as under current law but adjusts their parameters — cuts individual tax rates, including slashing the top rate for the highest earners from 39.6% to 37% and shifting the top bracket up slightly to income over $600,000 for people filing jointly or $500,000 for single filers. The law also nearly doubles the standard deduction to $12,000 for single filers and $24,000 for joint filers, while suspending the $4,050 personal exemption that can now be used for the filer, his or her spouse, and any dependents. Those changes, however, expire at the end of 2025, while the law cuts the corporate tax rate from 35% to 21% permanently.

The House, which was forced to vote for the measure for a second time in two days because of a procedural issue, passed the bill Wednesday by a vote of 224 to 201. And the Senate passed the measure just after midnight Wednesday in a 51–48 vote, with Vice President Mike Pence presiding.

Sen. John McCain, who is in Arizona receiving care for complications from his cancer treatment, was the lone Republican who did not cast a vote for the bill in the Senate. Sen. Thad Cochran has also been dealing with illness, but was able to make it to the chamber and voted for the bill.

The Senate vote was interrupted several times by protesters chanting "Kill the bill, don't kill us!" Several protesters were removed from the chamber. When the vote was read out by Pence, a final protester yelled “You have sentenced me to die!” as Republicans began applauding the passage of their bill.

Neither Ryan nor Senate Majority Leader Mitch McConnell were deterred by any criticism, and said Republicans would eventually be able to convince voters the bill would help them.

“If we can’t sell this to the American people we ought to go into another line of work," McConnell told reporters after the Senate’s final vote. "I think this is an important accomplishment for the country that people will value and appreciate, but obviously it requires us continuing this discussion.”

While the Friday signing was relatively low-key, Trump invited congressional Republicans to the White House Wednesday afternoon to celebrate the bill's passage, where he hailed the bill as record-breaking and "something special" and brought Ryan, Pence, and others up to speak on its behalf.

The event was replete with circular congratulations.

“These are the people right behind me who worked so hard, so long,” Trump said of congressional leadership. "Something this big, something this generational, something this profound could not have been done without exquisite presidential leadership," Ryan said of Trump.

The Republican Party and the president now have their first major legislative success of the year, one that’s long been a priority for Ryan, McConnell, and many congressional Republicans, as well as the party’s high-dollar donors. The earlier, nearly identical version of the plan passed the House with a 227–203 vote Tuesday with a jubilant Ryan in the chair.

Maybe the most enthusiastic gavel-banging of all time

“It's an honor to be speaker of the House to see this,” Ryan said at a press conference before the House’s first vote Tuesday. Asked if he was concerned by recent polling that shows the bill to be broadly unpopular, Ryan said he had “no concerns whatsoever,” and blamed the low public support on misinformation. “Results are going to make this popular,” he said.

Republican Rep. Tom Cole defended the bill against polling soon after the vote. "Most of the polling, it seems to me, reflects the Republican brand or where the president's at, it doesn't really reflect much knowledge about the bill," he told reporters, adding that he believes if members can accurately explain the legislation to their constituents, it will rebound in public surveys.

"I think we did a bad communications job in talking about what's in here," Republican Rep. David Young told BuzzFeed News after the vote. "When I'm out talking to people one on one and what's in this bill, people are positively responding to it."

The law also does away with the Affordable Care Act’s individual mandate to obtain insurance, effectively making the tax bill double as Republicans’ biggest blow to Obamacare. That change is due for 2019. The Congressional Budget Office projects stripping the mandate will have three big impacts: It will increase the number of uninsured people by 13 million by 2027, as healthier people opt to not buy insurance; it will increase average premium costs, as insurers’ pools lose healthier customers; and it will decrease federal budget deficits by $338 billion between 2018 and 2027 as federal subsidy payments decrease.

"I think Obamacare is over because of that," Trump said of the provision before signing the law Friday.

The compromise conference bill came after the House and Senate passed their own separate but similar tax plans in recent weeks, and it was designed to win over shaky Republicans in the Senate. But it also needed to abide by Senate procedural rules (hence many of the changes being only temporary).

Since the Senate passed the bill under rules that only require a simple majority, the plan needed some last-minute changes Tuesday night. Senate Democrats told reporters after the House held its initial vote Tuesday afternoon that the Senate parliamentarian, who makes sure legislation sticks to designated procedure, determined that three provisions in the bill the House passed violate the so-called Byrd rule, which requires legislation under the Senate's reconciliation procedure to not impact policy areas that are deemed extraneous to the topic at hand.

Those provisions include how the bill changes 529 college savings plans so they can be used for home-school expenses, how the bill determines what private colleges and universities will need to pay a new excise tax on their endowments, and, finally, the bill’s short name. Yes, there was apparently a procedural problem with “The Tax Cuts and Jobs Act.”

The plan underwent other late changes to ensure Senate passage. At the end of last week, to win the support of Sens. Marco Rubio and Mike Lee, congressional negotiators temporarily expanded the Child Tax Credit in the measure from the current $1,000 per child to up to $2,000 per child. The law makes $1,400 of the credit refundable, so families who pay little, or even zero, income tax will be able to take advantage of the credit.

Even with the compromises, though, some House Republicans voted against the bill earlier this week. Some members from high-tax states, like New York, California, and New Jersey, oppose the law because of how it changes the State and Local Tax deduction.

Republican nays on House’s re-vote(?) on the tax bill, which just passed.

Up to this point, taxpayers have been able to deduct the amount of money they pay in state and local taxes from their federal taxes, which is a significant amount of money for people in high-tax, and predominantly Democratic-leaning, states. Under the new law, taxpayers can only deduct up to $10,000 in state and local taxes on their federal return, including property, income, and sales taxes.

Rep. John Faso, an upstate New York Republican who voted against the bill, said in statement Monday that the change in the SALT deduction “will accelerate the trend of hardworking individuals and businesses already leaving our state – further eroding New York’s tax base.”

Sen. Bob Corker, the only Republican to vote against the Senate’s initial tax bill, wound up voting in favor of the conference version, despite his earlier concerns about projections that the legislation would add nearly $1.5 trillion to the deficit over a decade.

Additional reporting contributed by Lissandra Villa.

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