House votes to extend individual tax cuts

House votes to extend individual tax cuts
© Greg Nash

The House on Friday voted to permanently extend the individual tax cuts in President TrumpDonald John TrumpTrump suggests some states may 'pay nothing' as part of unemployment plan Trump denies White House asked about adding him to Mount Rushmore Trump, US face pivotal UN vote on Iran MORE’s 2017 tax law, giving House Republicans a chance to tout the law as they prepare to leave Washington to campaign.

The legislation passed on a vote of 220-191. Three Democrats voted for the legislation and ten Republicans voted against it.

Two of the Democrats who voted for the bill, Reps. Jacky RosenJacklyn (Jacky) Sheryl RosenSenate Democrats demand answers on migrant child trafficking during pandemic Democrats call for expedited hearing for Trump's public lands nominee Democrats call for McConnell to bring Voting Rights Act to floor in honor of Lewis MORE (Nev.) and Kyrsten Sinema (Ariz.), are both running for Senate. Rep. Conor Lamb (Pa.) is in a competitive race against Rep. Keith RothfusKeith James RothfusLobbying world Conor Lamb gets 2020 challenger touted by Trump The 31 Trump districts that will determine the next House majority MORE (R) in the newly drawn 17th District of Pennsylvania.

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A number of Republicans in blue states, some of whom are in competitive reelection races, voted against the bill. All of the GOP "no" votes were lawmakers from New York, New Jersey and California who opposed the measure because they did not want to cement the 2017 tax law’s $10,000 cap on the state and local tax deduction.

The bill is not expected to get a vote in the Senate ahead of the midterms, and it is unclear whether the tax cuts will actually help Republicans in the elections. But House Republicans view the 2017 law as working to boost the economy and think cementing the law’s individual tax cuts is a way to build on their signature accomplishment.

The 2017 tax law’s changes to the individual code — including the lower rates, larger standard deduction and deduction for pass-through businesses — are slated to expire after 2025 under current law. GOP lawmakers made the individual tax cuts temporary in order to comply with budget rules that allowed the 2017 law to pass with a simple-majority vote in the Senate.

House Republicans, with the support of Trump, want to make the tax cuts permanent both because they think it’s good policy and because they think it will benefit them politically. They see it as a way to highlight strong economic numbers and to force Democrats to go on the record about extending tax provisions that benefit middle-class taxpayers.

“It’s critical we keep this strong momentum going,” House Ways and Means Committee Chairman Kevin BradyKevin Patrick BradyOn The Money: Five takeaways from the July jobs report Stimulus checks debate now focuses on size, eligibility Pelosi huddles with chairmen on surprise billing but deal elusive MORE (R-Texas) said. He added that the bill would “keep America’s economy booming and middle-class families growing again.”

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But Democrats, who all voted against the 2017 law, view the bill to cement the individual tax cuts as legislation that will largely benefit the wealthy and add to the debt.

“Their second round of tax cuts for the wealthy will further compromise the future of Medicare and Social Security,” said Ways and Means ranking Democrat Richard NealRichard Edmund NealTrump puts trade back on 2020 agenda Biden says Trump executive order is 'a reckless war on Social Security' Conservatives urge Trump to take unilateral action to suspend payroll tax collection MORE (Mass.). He added that the bill demonstrates that Republicans “are hardly the party of fiscal rectitude or conservatism.”

Polling has indicated that Democrats’ attacks on the 2017 law are resonating with voters. A Republican National Committee poll that Bloomberg reported on last week found that most voters think the law helps corporations and the wealthy more than middle-class families.

The Joint Committee on Taxation , Congress’s tax scorekeeper, estimated that the new bill would lower federal revenue by $631 billion from 2019 to 2028, before accounting for economic growth. It estimated that the bill will reduce revenue by $545 billion in the budget window after taking economic effects into consideration.

The committee also estimated that high earners would receive a large share of the tax cuts in the bill, but that the percentage of federal taxes paid by those with incomes of at least $1 million would increase slightly.

The bill is one of three pieces of legislation in a package that House Republicans are calling “tax reform 2.0.” On Thursday, the House passed the other two bills: one of which is focused on incentives for families to save money, while the other is designed to encourage entrepreneurship.

The politics on the bill to cement the individual tax cuts are complicated in the Senate. It would need 60 votes to pass the Senate, and there are only 51 Republicans. Some Senate Republicans have said they wouldn’t support the legislation due to its impact on the deficit.

Additionally, if a few red-state Senate Democrats up for reelection this year voted for the bill, it would undercut Republican challengers’ attacks on the incumbents.