Senate Republicans Passed A Massive Tax Bill In The Middle Of The Night That They Kept Changing Until The Last Minute

The bill would reshape the tax code in favor of corporations and do more to undercut Obamacare than anything Republicans have yet managed to pass.

Senate Republicans passed their version of a massive tax overhaul just before 2 a.m. Saturday morning, knocking off one more obstacle to President Donald Trump and the Republican Congress's first major legislative achievement this year.

The bill — the final text of which was released publicly after 9:30 p.m. Friday, and still contained scribbles in the margins — would vastly rewrite how the US tax code works, favoring corporations large and small, owned by a few partners or by a globally diversified shareholder base.

The bill would also be Trump and the Republican Congress's biggest step in unwinding the Affordable Care Act, as it would eliminate the individual mandate to buy health insurance. The Congressional Budget Office estimates that the change would jack up premiums and lead to 13 million more uninsured people than there would otherwise be in 10 years, and 4 million more in 2019.

The Senate passed the bill 51–49, with Sen. Bob Corker the only Republican voting against the bill. Vice President Mike Pence was on hand to preside over the vote, and was met with applause after reading out the final tally. Frustrated Democrats, meanwhile, had abandoned the floor after voting.

Speaking to reporters as he left the White House for New York City on Saturday morning, President Trump praised the senators for passing "tremendous tax reform."

"People are going to be very, very happy. They're going to get tremendous, tremendous tax cuts and tax relief, and that's what this country needs," he said.

Trump this morning on tax bill: "It was the biggest package in terms of tax cuts ever passed in our country...peopl… https://t.co/zFSba1z6Lz

The next step for the legislation is up to the House of Representatives. The House can either pass the Senate's bill as is, or go to conference with the Senate to meld the bill with the legislation House Republicans recently passed. The House bill has a different structure for individual tax rates and a different approach to taxing businesses run by their owners than the Senate bill, and it includes a complete elimination of the estate tax. The House bill also scraps the deduction people can claim for medical expenses and puts the 20% corporate rate into effect faster.

House leadership is currently planning on moving to a conference to combine the bills as quickly as possible. In a statement Saturday morning, House Speaker Paul Ryan congratulated Senate Republicans on the bill and said, "Now we will move quickly to a conference committee so we can get a final bill to President Trump’s desk."

Trump tweeted just before 3 a.m. on Saturday that he hopes to reach that point before the end of the year.

We are one step closer to delivering MASSIVE tax cuts for working families across America. Special thanks to… https://t.co/L07UncQMZS

For now, the feeling among Senate Republicans is emphatically positive.

"This is a great day for America," Senate Majority Leader Mitch McConnell told reporters after the vote Saturday morning.

After an up-and-down several days, Republican leaders were bullish on the bill for most of the day Friday. Senate leadership appeared to have secured 51 votes for the bill Friday afternoon, well before the bill was finalized.

"I'm ecstatic," Sen. David Perdue told BuzzFeed News late Friday night.

The publicly released Senate tax bill they're voting on tonight still has the infamous scribbles

Senate Democrats were livid about the bill and the process that played out Friday night, as a flow of late changes were made to the bill just before it came to the floor for a vote.

"Historians will mark today as one of the darkest black-letter days in the long history of the Senate," Senate Minority Leader Chuck Schumer said from the floor, soon before the vote.

The bill, he said, "was chock full of special-interest giveaways before tonight, but under the cover of darkness and with the aid of haste, a flurry of last-minute changes will stuff even more money into the pockets of the wealthy and the biggest corporations, while raising taxes on millions in the middle class."

McConnell hit back at Schumer in his own comments after the vote. "You complain about process when you're losing," he said.

Senate Democrats seized upon one obscure amendment late Friday night that they claimed would exempt a single Michigan liberal arts school, Hillsdale College, from a new tax on endowment income. The college is a conservative beacon in the culturally liberal higher education world. It rejects most federal funding, including student loans, and many of its students go on to work in conservative movement institutions. Erik Prince, the brother of Education Secretary Betsy DeVos and founder of the controversial security firm Blackwater, is one prominent alumnus.

Sen. Pat Toomey, who included the amendment, defended the college on the Senate floor. "I actually think it's a wonderful institution... I commend them for their choice, as other colleges, of foregoing taxpayer money that they could be taking... I think any college in that category, whether it's Hillsdale or any other college, ought not to have to pay the tax on endowment."

Schumer described the amendment as a "metaphor for the whole bill." The fate of the amendment, though, proved a lonely bright spot for Democrats: It was defeated just after 1 a.m., soon before the final vote, with four Republicans joining all Democrats in voting against it.

I was just handed a 479-page tax bill a few hours before the vote. One page literally has hand scribbled policy cha… https://t.co/JdMIEfWZgj

In order to pay for at least some of the large cuts in the Senate plan — businesses run by their owners would be able to deduct 23% of their income before paying taxes, while the rate paid by corporations on their income would fall to 20% — a wide swathe of deductions enjoyed by higher-income wage earners would fall away, notably the deduction for state and local taxes.

The amount that these businesses — which include everything from dry cleaners to real estate partnerships — would be able to deduct from their tax bills was a key point of contention among Republicans going into Friday. Sens. Steve Daines and Ron Johnson only came on board with the bill Friday morning, after the deduction moved up from 17.4% to 23% over the past week.

In order to pay for broader and deeper cuts, the Senate also scrapped their total repeal of the alternative minimum tax for individuals — a separate tax system that's supposed to ensure that people don't use deductions to excessively wipe out their tax liability. Getting rid of the AMT was supposed to be one of the ways the House and Senate tax bills would simplify the code. Instead, the Senate put the tax system back into the bill with modifications on Friday. The House bill eliminates the tax.

Throughout Friday, senators who had held out because of their concern about tax cuts not being extensive enough won key concessions, while those that were on the fence because they thought the bill would expand deficits too much walked away with less solid commitments.

Sen. Susan Collins, the Maine Republican who voted against the Senate's health care bill and was viewed as a key vote for the tax plan, got several amendments into the bill, including letting taxpayers deduct the first $10,000 of their property tax bills from their federal taxes.

"I think we should be cutting everyone’s taxes," Sen. Ted Cruz said. "Susan Collins prevailed in amending the bill to exclude $10,000 of property taxes from your federal income tax liability — that's a significant improvement."

As the bill was being rewritten Thursday night and through Friday, Republicans were able to scrounge up money to allow them to further cut taxes without increasing the cost of the bill, but rejected entirely proposals to reduce the fiscal impact as a whole.

After the bill hit a snag Thursday night, Republicans were discussing adding automatic increases in the corporate tax from its proposed 20% rate in order to eliminate at least $350 billion in added debt over the next 10 years. This was at the urging of Sen. Bob Corker, who had earlier proposed an automatic tax hike if the bill didn't raise enough money from added economic growth. That so-called "trigger" option was rejected by the Senate parliamentarian due to rules that allowed the Senate to pass the bill with only a bare majority of votes, leaving the Senate to look elsewhere for ways to assuage Corker as well as Sen. Jeff Flake.

By Friday morning, however, the tax hikes were dead.

"It was extended conversation that went on into the late hours of the night and continued early in the morning," Cruz said Friday, explaining how the Senate came to reject the hikes entirely. "I and a number of other senators had strong objections to that proposal, and that proposal did not carry the day. The $350 billion in tax increases is not in the bill — that was the right thing to do."

Corker was unable to bring any Republicans with him to vote against the bill — Sens. James Lankford and Jeff Flake, who had originally supported a "trigger" mechanism and did not declare their position on the bill until late this week, did not join Corker.

"I’ve never tried to rally [them] — each person has to vote their conscience and that’s what this is all about," Corker said.

"I am disappointed. I wanted to get to yes. But at the end of the day, I am not able to cast aside my fiscal concerns and vote for legislation that I believe, based on the information I currently have, could deepen the debt burden on future generations," Corker said in a statement.

"I’m a dinosaur on the fiscal issues," he said earlier Friday.

Other Republicans mainly had praise for Corker, despite his dissenting vote. "I respect Bob so much as senator," Perdue told BuzzFeed News late Friday night. Trump and Corker "had a really great conversation," he added. "Bob called the president; there was a clearing of the minds. It was very professional. I'm sure the President tried to beseech him. I'm very impressed with Bob and how he handled this."

The bill includes, at least temporarily, some direct benefits for normal taxpayers: The standard deduction that people are allowed to lop off their taxable income if they don't claim other deductions would increase from $6,350 to $12,000 for individuals, and from $12,700 to $24,000 for married couples, while the child tax credit would be expanded up to $2,000 from $1,000.

For wealthy taxpayers, there are direct benefits as well: The first $11 million of estates transferred upon death would go untaxed, while the top overall tax rate would fall to 38.5% from 39.6%.

But the Senate's tax bill is hardly static. It will force future Congresses and presidents to make choices about whether to continue its benefits for middle-income taxpayers or possibly expand the deficit even further than currently projected.

The Joint Committee on Taxation, Congress's tax scorekeepers, projected Thursday that, even accounting for the effects on economic growth, the bill would add $1 trillion to the deficit over 10 years. But that's assuming that most of the personal tax changes expire at the end of 2025, as they're scheduled to under the bill. The final projection could also still change somewhat, as the JCT's Thursday estimate was based on earlier text of the bill.

The bill includes a change in the way tax brackets grow, meaning that over time, as individuals' incomes went up, they would enter a new bracket and pay a higher marginal rate. By 2027, about half of all taxpayers would be paying more in taxes than they would otherwise, according to the Tax Policy Center, while higher-income taxpayers would be paying less.

If nothing is allowed to expire, the Committee for a Responsible Federal Budget estimates that the real cost of the tax bill in 10 years would be over $2 trillion in new debt.

These estimates have been hotly contested by most Republican senators, who insist that the bill would generate such high economic growth that it would wash out most negative effects on the debt, and would supercharge wages paid to most American workers.

"I'm totally confident this is a revenue-neutral bill — actually a revenue producer," McConnell said after the final vote.

"The best way to pay down the deficit is economic growth and cutting taxes," Cruz said earlier Friday.

In order to get the bill passed, Trump has also committed to supporting two pieces of legislation before the end of the year that would help partially alleviate the spike in insurance premiums that would come from fewer people buying into Obamacare's individual market.

But what will emerge from the conference process and whether it will gain the assent of both the House and Senate remains to be seen.

"One step at a time — I don't want to get ahead of myself," Sen. Lisa Murkowski, a key yes vote for the bill, said. "We will deal with what happens in conference when we have the opportunity to do that."

Twelve Republican members of the House of Representatives sent a letter to McConnell opposing a provision in the Senate tax bill that would open up the Arctic National Wildlife Refuge in Alaska to energy exploration, which was not included in the House bill but is a major priority for Murkowski. "I plan to do everything that I can to make sure that the promise to Alaska is fulfilled and they open up ANWR," Murkowski said.

Murkowski was celebratory after the bill passed with the ANWR measure included. "We have been trying to open to oil and gas production for 40 years now," she told reporters.

"I'm sure they're back-channelling discussions," Senate Majority Whip John Cornyn said earlier Friday about any negotiations between the House and Senate. "I’ve always expected there’d be a conference with the House — there’s a number of things we’ve done that they didn’t do that has to be reconciled one way or the other."

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