WASHINGTON (DTN) — The House of Representatives on Thursday voted to approve a nearly $1.5 trillion tax overhaul bill. The bill passed with a 227-to-205 vote.
President Donald Trump traveled to Capitol Hill ahead of the House vote Thursday morning to urge House Republicans to approve the measure.
The bill would cut the corporate tax rate from 35% to 20%, a level set early in the debate over tax reform. Businesses would get immediate expensing of capital costs, but business interest would be limited and other tax deductions and tax credits would go away.
The bill also doubles the estate-tax exemption to $11 million for individuals, up from $5.49 million. The estate tax is phased out entirely after 2023 under the House bill.
Attention now turns to the Senate Finance Committee, which continues working on its tax overhaul bill. The Senate will eventually be the chamber to watch on tax reform, because Republicans hold a slim majority. Some Republican senators have already panned the tax-reform bill because of the impacts on the annual budget deficit and long-term federal debt. Sen. Ron Johnson, R-Wis., became the first GOP senator to officially oppose the bill on Wednesday. Johnson told the Wall Street Journal the bill favors corporations too heavily over other types of businesses.
“If they can pass it without me, let them,” Sen. Johnson told The Wall Street Journal. “I’m not going to vote for this tax package.”
The conservative group Heritage Action praised the House bill, known as H.R. 1, the Tax Cuts and Jobs Act. “Since the last major update to our nation’s tax code in 1986, lawmakers from both parties have talked about providing relief to families and made repeated promises to help Americans keep more of their hard-earned dollars,” said Heritage Action CEO Michael Needham in a news release. “The Tax Cuts and Jobs Act has paved the way to achieve just that, and once passed, will mark a critical step in the legislative process.”
But the National Farmers Union sent members of Congress a letter Wednesday urging a no vote, and the Democratic-leaning group said it would score the vote on its legislative scorecard distributed to members.
“While we appreciate the significant efforts to address concerns brought forth by the agricultural community, we oppose this bill because it falls short in many areas,” said NFU President Roger Johnson.
“We are greatly concerned over the negative impact this bill could have on farmers, ranchers, and rural residents and our country’s fiscal situation.”
NFU President Johnson cited the following provisions as problems:
— Reducing a carryback provision on net operating losses from five years to one year, and only in cases of disaster. “Offsetting the changes with unlimited carryforward provides substantially less value,” Johnson said.
— Repeal of the Domestic Production Activities Deduction (Sec. 199), which allows agricultural cooperatives to pass on the deduction for certain production and marketing expenses to farm and ranch members. “We appreciate the House’s efforts to include a $75,000 rate cut for certain business income, but the provision does not adequately offset the repeal of Section 199,” Johnson said.
— Sunset provisions in 2023 that would be linked to existing deductions such as bonus depreciation and Section 179.
— Continued growth of the national debt.
“Adding $1.5 trillion over the next 10 years is alarming. We are equally concerned over potential future spending reductions to offset the reduced revenue resulting from this tax cut,” Johnson said.
— The PAYGO assessment of the Congressional Budget Office that the White House Office of Management and Budget would be required by law to sequester $136 billion in fiscal year 2018 and similar funds each successive year.
“Given the limited number of non-exempt mandatory accounts that can be sequestered, non-exempt programs would need to be sequestered at 100%. That sequestration would eliminate important aspects of the farm safety net, including the Agricultural Risk Coverage and Price Loss Coverage programs. Such a scenario would be devastating to family farmers,” NFU’s Johnson said.
The National Conference of State Legislatures sent both houses of Congress a letter urging that the tax bill neither modify nor eliminate the deduction for state and local taxes, known as SALT.
Under the House bill, farmers could still deduct property taxes as a business expense, but the deduction for home property taxes and state income taxes would be limited to $11,000.
The Senate bill also would allow a deduction for business property taxes, but eliminates the deduction for home property and state income taxes.