The GOP Has a Deal: Here's What's in the Final Tax Plan

By Yuval Rosenberg and Michael Rainey Republicans Can See the Finish Line House and Senate Republican leaders have reached an agreement on a compromise tax bill, and they say they will forge ahead with a vote next week on the final plan despite objections from Democrats who demanded that the process be put on hold until Doug Jones, who defeated Republican Roy Moore in the closely watched Alabama senatorial election Tuesday night, can be sworn into office. "Let's not waver now — let's not give in to the Washington status quo, not when tax reform is so close," House Ways and Means Chairman Kevin Brady [exhorted]( his colleagues. President Trump, in an afternoon speech, promised Americans “a giant tax cut for Christmas” and he once again falsely described the cuts as the largest ever. “If Congress sends me a bill before Christmas — this is breaking news — the IRS has just confirmed that Americans will see lower taxes and bigger paychecks beginning in February,” he said. With the Deal Done, Tax Writers Held a Public Meeting: News of the deal came before the House and Senate conferees began their only public meeting on the bill, which quickly turned testy. “Let’s understand what’s happening today is a sham,” said Sen. Ron Wyden of Oregon, the top Democrat on the Senate Finance Committee. “Nobody ought to mistake this conference for real debate.” What’s in the Final Tax Bill: The outlines of the agreement are reportedly still as we described them here yesterday. The plan would: - Lower the top tax rate to 37 percent, down from the current 39.6 percent, with the threshold for that top bracket lowered from the $1,000,000 for married couples set in the House and Senate bills. - Keep seven tax brackets, as in the Senate plan - Allow homeowners to deduct interest on the first $750,000 of a new mortgage - Allow taxpayers to choose to deduct up to $10,000 in state and local income, sales or property taxes - Cut the corporate tax rate from 35 percent to 21 percent, a tick higher than the 20 percent rate included in the House and Senate bills, and have the new rate take effect next year, not 2019 as in the Senate bill - Eliminate the corporate alternative minimum tax - Provide a 20 percent deduction on pass-through business income, down from 23 percent in the Senate bill - Repeal Obamacare’s individual mandate The full details of the compromise will be released later this week. Lawmakers must still find out from analysts at the Joint Committee on Taxation whether the revisions will comply with budget rules that limit how much the bill can add to the deficit. And a small group of Republican senators, including Susan Collins of Maine, Ron Johnson of Wisconsin and Marco Rubio of Florida, could still look to exert some leverage over the deal by threatening to withhold their support, but it’s unlikely that the fast-moving tax cut train will get derailed at this point. Dueling Quotes of the Day “Our tax cuts will break down — and they'll break it down fast — all forms of government and all forms of government barriers and breathe new life into the American economy. They will unleash the American people, they will tear down the constraints on discovery, innovation and creation, and they will restore the hopes and dreams of the American family. Millions of middle class families will win under our plan.” — President Trump in what the White House called his "closing argument" for tax reform “The American people are witnessing a master class in how one political party, relying on secrecy, distortion and brute force, can muscle an unpopular, deficit-exploding corporate giveaway to passage. This is the ultimate betrayal of the middle class.” — Sen. Ron Wyden (D-OR) on the tax plan No December Shutdown Over Dreamers, but We’re Not Out of the Woods Yet House Minority Leader Nancy Pelosi had [vowed]( to not leave town for the holidays until she made a deal to help the “Dreamers,” children of illegal immigrants who in March will lose their protections under the Deferred Action for Childhood Arrivals program. It looked like Democrats would use the budget as leverage in negotiations. But [Politico]( reports that Democrats now say they won’t force a shutdown over the issue, and instead will work on a separate bipartisan agreement, likely early next year. But Congress isn’t out of the woods yet, and still needs to make another deal to fund the government by December 22. With some conservatives saying they’ll reject any budget deal that increases government spending outside of defense, GOP leaders are considering yet another short-term funding bill to keep the government open until January 19. One [plan]( is to provide $640 billion for the Pentagon in the bill — short of the $700 billion authorized by Congress but probably enough to placate defense hawks — while adding some sweeteners on children’s health care and disaster relief to win Democratic support. Some Democratic senators are reportedly rejecting that approach, however, which means that the pre-holiday shutdown showdown is still a distinct possibility. Will the GOP Tax Plan Create Jobs? Business Execs and Big Investors Say No Republicans say that their tax cut plan will spur additional job creation and higher wages for workers. But corporate CFOs and institutional investors think otherwise, according to two small new surveys. In a new [CNBC Global CFO Council survey]( about 8 percent of corporate finance chiefs from large companies — apparently two out of 24 respondents — said that the tax overhaul would increase employee wages next year. Just 4 percent, or 1 out of 24, said it would “most likely” increase headcount. Half of the CFOs said the tax changes would benefit large corporations most if it becomes law, and nearly three in four said their company supports at least one version of the overhaul. Similarly, a survey of 113 hedge fund managers and large investors by industry data provider [BarclayHedge]( found that while nearly 70 percent think the tax plan will be good for the stock market, only 12 percent said companies will expand their operations or hire new workers. Almost half said they expect corporations to use their tax savings to buy back shares or raise dividends, while 23 percent said they expect increased merger and acquisition activity. About 10 percent said they expect companies will use their tax savings to increase spending on “labor saving automation.” [Share]( [Tweet]( [Forward]( Send Us Your Tips and Feedback: Email Yuval Rosenberg at yrosenberg@thefiscaltimes.com and follow me on Twitter [@yuvalrosenberg](. Follow The Fiscal Times on Twitter [@TheFiscalTimes](. It’s Good to Be the Boss: Owners Get a Bigger Tax Cut Than Employees Under GOP Plan The Republican tax bill rewards some business owners significantly more than their employees, according to a new analysis by the bipartisan Tax Policy Center. Looking at the Senate version of the Tax Cuts and Jobs Act, TPC found that workers who receive their income as wages would receive a 1.5 percent tax cut on average, while the owners of pass-throughs such as partnerships stand to get a 4.3 percent cut, nearly three times more. TPC’s [Howard Gleckman writes]( “To put it another way, Joe the Plumber could get a much bigger tax cut as JTP LLC than as an employee of a building management firm. Similarly, a software engineer may pay less in taxes as a consultant than as an employee — even if she does exactly the same work at exactly the same pay. Or, a partner in a real estate development firm might get a far bigger tax cut than a surgeon employed by a hospital, even though their income is the same.” Gleckman says that although this is a problem — “This violates a basic rule of good tax policy: that taxpayers with similar situations should be treated similarly” — the conclusion is clear: “on average, taxpayers — especially high-income taxpayers — would be much better off owning their own pass-through businesses than working for someone else.” [Share]( [Tweet]( [Forward]( News - [Are Tax Cuts Worth Adding $1 Trillion in Debt?]( – Politico - [Doug Jones Victory Nearly Closes the GOP Doorway to Obamacare Repeal]( – Washington Post - [Fed Raises Rates, Eyes Three 2018 Hikes as Yellen Era Nears End]( – Bloomberg - [Collins Confident Health Subsidies Will Be in Spending Bill]( – The Hill - [GOP Tax Plan Could Bring Big New Year's Surprises]( – Politico - [Tentative Tax Deal Scraps Hit on Tuition for Graduate Students]( – Bloomberg - [House GOP Leaders Eye 'Defense Only' Spending Bill]( – Politico - [House Republicans Introduce Bills That Delay ACA Taxes]( – FierceHealthcare - [How Highway Stimulus Spending Turned into a Dead End]( – St. Louis Fed - [The Pentagon Takes Climate Change Very Seriously. GAO Says That's Not Enough]( – Washington Post - [Farmers Circle Wagons to Save $100-a-Cow Tax Deduction]( – Wall Street Journal - [Trump, Tasty Pigs and Hurricanes: The Top Medical Stories of the Year]( – Newsweek Views - ['It's the Grandparents Stealing from the Grandchildren']( – Eric Schnurer, The Atlantic - [Public Investment Will Decline Under the Republican Tax Plan]( – Gary Burtless, RealClear Markets - [Rubio-Lee’s Defeat Was a Bipartisan Slap in the Face to Families]( – Joshua T. McCabe, National Review - [Voters Will Remember the Republicans Who Made This Mess]( – David Ignatius, Washington Post - [Don't Expect an Investment Boom if the Corporate Tax Rate Is Cut]( -- Paul Kasriel, Financial Sense - [Scam I Am: Why is the G.O.P. Rushing This Tax Abomination?]( – Paul Krugman, New York Times - [Populist Plutocracy and the Future of America]( – Nouriel Roubini, Project Syndicate - [Regulatory Reform Is the Jan Brady to Tax Reform's Marcia]( – Laura Jones, The Hill - [Republicans Finally Find Something More Important Than a 20 Percent Corporate Tax Rate]( – ThinkProgress - [There's No Easy Fix for Chicago's Debt Dereliction]( – Nicole Gelinas, Investor's Business Copyright © 2017 The Fiscal Times, All rights reserved. You are receiving this newsletter because you subscribed at our website, thefiscaltimes.com. Our mailing address is: The Fiscal Times 712 Fifth AvenueNew York, NY 10019 [Add us to your address book](//thefiscaltimes.us1.list-manage.com/vcard?u=40d2c5373681f5cd830b6d823&id=714147a9cf) If someone has forwarded this email to you, consider signing up for The Fiscal Times emails on our [website](. Want to change how you receive these emails? 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