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Senate Approves Landmark Tax Overhaul, Bill Returns To House

Senate Majority Leader Mitch McConnell (left) speaks at the press conference after the senate vote of the tax reform bill on Wednesday in Washington, D.C
Tasos Katopodis
Getty Images
Senate Majority Leader Mitch McConnell (left) speaks at the press conference after the senate vote of the tax reform bill on Wednesday in Washington, D.C

Updated at 1:26 a.m. ET Wednesday

Republicans in Congress approved a sweeping and controversial $1.5 trillion tax overhaul, with the Senate voting early Wednesday along straight party lines to move the measure forward.

It is the first major rewrite of the tax code in more than three decades and it marks a huge legislative victory for President Trump and GOP lawmakers, who have seen their agenda stalled amid steadfast Democratic opposition and disarray within their own party. Passage of the tax cut, while unpopular across much of the political spectrum, speaks to the Trump base of the Republican party, and to businesses and wealthy Americans, who will accrue most of its windfalls.

Moments before the deciding vote was cast, a protest broke out in the Senate chambers, with chants of "Kill the bill, don't kill us!"

The vote was 51-48, with all Republicans voting in favor and all Democrats opposed.

President Trump tweeted about the vote shortly afterward:

On Tuesday afternoon, the Senate parliamentarian ruled that two provisions in the bill would have to be removed, meaning that the House will need to vote again, with passage almost certain.

One provision at issue would allow families to use education savings accounts, often called 529 accounts, to pay for K-12 private schools and home-schooling expenses. The other would exempt private colleges and universities with fewer than 500 tuition-paying students from a new tax on their endowments.

Both provisions have been found to be in violation of the Byrd Rule, which governs the types of legislation that can be passed under reconciliation. Reconciliation is the process that allows budget bills to pass the Senate with 51 votes, without first getting the 60 votes needed to close debate. In part, the Byrd Rule says that provisions can't contain "extraneous matter" that doesn't pertain to the budget.

The House will reconvene Wednesday morning and is set to vote again then.

The House passed the final version of Republicans' $1.5 trillion tax overhaul on Tuesday afternoon, by a vote of 227-203.

That vote fell largely along party lines. No Democrats voted in favor of the bill, as was the case when the House passed its initial version of the bill in November. Twelve House Republicans voted against the bill.

The Senate bill passed largely along party lines as well. No Democrats voted for the bill in either of the House or Senate's initial votes, and the bill did not undergo any major changes in conference committee, where the differences between the House and Senate versions were reconciled.

Just before the House vote Tuesday, Speaker Paul Ryan, R-Wis., spoke, casting the bill as a long-awaited conservative victory that would benefit American workers.

"My colleagues, this is a day I have looked forward to for a very long time," he said. "We are about to achieve some big things — things that the cynics have scoffed at for years, decades even."

As he and other Republicans have done for months while promoting the plan, he likewise framed the bill as beneficial to workers and families.

"This is real relief for families out there living paycheck to paycheck, struggling to make ends meet," he later added.

However, House Minority Leader Nancy Pelosi, D-Calif., castigated Republicans for a bill that she said would particularly benefit the already-wealthy.

"In this holy time, the moral obscenity and unrepentant greed of the GOP tax scam stands out even more clearly," she said.

Though the bill would lower tax rates for many Americans, it also is in large part a corporate tax cut, lowering the top federal corporate tax rate drastically, from 35 percent to 21 percent.

According to a new report from the nonpartisan Tax Policy Center, the plan would overwhelmingly benefit the richest Americans. In 2018, the center estimates an average tax cut of $1,610, but the average household earning more than $1 million would get a tax cut of nearly $70,000.

However, the bill makes most individual tax changes temporary, setting them to expire after 2025, while making corporate tax cuts permanent. Republicans did this so that the bill could meet budgetary rules they had set out for themselves.

That early sunset of individual tax cuts means that come 2027, more than half of Americans could see a tax increase, according to the Tax Policy Center report.

Speaking to reporters after the House vote, Ryan said Republicans plan on extending those provisions.

"We have every intent of making those permanent," he said.

The bill is also set to add nearly $1.5 trillion to deficits over the next decade.

Republicans, eager to score a major legislative win, have pushed their tax overhaul through Congress at breakneck pace. Thus far, 47 days have passed since the Tax Cuts and Jobs Act was introduced in the House.

That is quick compared with the last time the tax code underwent major changes, with the Tax Reform Act of 1986. President Ronald Reagan signed that bill 323 days after it was first introduced in the House.

That is not the only way that this tax overhaul effort differs from the Reagan overhaul in 1986. That one had bipartisan agreement, with "yes" votes from 116 Republicans, along with 176 Democrats, as C-SPAN Capitol Hill producer Craig Caplan pointed out Tuesday.

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Danielle Kurtzleben is a political correspondent assigned to NPR's Washington Desk. She appears on NPR shows, writes for the web, and is a regular on The NPR Politics Podcast. She is covering the 2020 presidential election, with particular focuses on on economic policy and gender politics.
Scott Neuman is a reporter and editor, working mainly on breaking news for NPR's digital and radio platforms.