WASHINGTON — Conservatives in the House Freedom Caucus said Thursday they support a sweeping tax package speeding toward votes in Congress next week, giving GOP leaders a boost from a key faction as they work to deliver a major legislative victory to President Donald Trump.
“I think it’s going to pass. I think you’re going to see the vast majority of the Freedom Caucus people vote for it,” said Rep. Jim Jordan, R-Urbana.
The leader of the caucus, Rep. Mark Meadows, R-N.C., said, “I know enough (about the agreement) to know that at this point, I don’t have any alarm bells going off.”
The Freedom Caucus is a key constituency for House GOP leaders because, with more than 30 members, a united caucus could kill any bill that lacks support from Democrats. Congressional Democrats, who were excluded from crafting the tax package, have been united against it.
House and Senate Republican leaders forged an agreement Wednesday on the most sweeping overhaul of the nation’s tax laws in more than 30 years. The package would give generous tax cuts to corporations and the wealthiest Americans, and more modest tax cuts to low- and middle-income families.
The agreement also calls for scrapping a major tax requirement of the “Obamacare” health law, a step toward the ultimate GOP goal of unraveling the law.
The tax package is polling badly among the public, but Republicans say that will turn around after Americans see the benefits.
“What comforts me greatly is the fact that the results are going to produce,” said House Speaker Paul Ryan, R-Wis. “I’m convinced this is going to help repatriate capital. I’m convinced this is going to launch more investment in businesses and workers. I’m convinced this is going to give bigger paychecks, a simpler system.”
“The results are going to be what sells this bill, not the confusion before it passes,” Ryan added.
The legislation, still being finalized, would cut the top tax rate for the wealthiest earners — Trump among them — from 39.6 percent to 37 percent, slash the corporate income tax rate from 35 percent to 21 percent and allow homeowners to deduct interest only on the first $750,000 of a new mortgage.
The top tax rate currently applies to income above $470,000 for married couples, though lawmakers are reworking the tax brackets.
The standard deduction would be nearly doubled, to $24,000 for married couples.
The business tax cuts would be permanent, but reductions for individuals would expire after a decade — saving money to comply with Senate budget rules. In all, the bill would cut taxes by about $1.5 trillion over the next 10 years, adding billions to the nation’s mounting debt.
Details of the agreement were described by Republican senators and congressional aides. The aides spoke on condition of anonymity because they weren’t authorized to publicly discuss private negotiations.
Republicans view passage of the legislation as a political imperative, proving to voters they can govern as the GOP fights to hold onto its majorities in the House and Senate in next year’s elections. Republicans say they expect the package to increase economic growth, generating additional tax revenue and lessening the hit to the $20 trillion budget deficit. Independent economists aren’t as optimistic.
Federal Reserve Chair Janet Yellen said Wednesday that she and her Fed colleagues, who set interest rate policy, expect a “modest lift” to economic growth from the tax package.
Negotiators have removed several controversial provisions from the tax bill, including one that would have eliminated the deduction for interest on student loans and another deduction for medical expenses, said two congressional aides. Also, the bill would no longer start taxing graduate-school tuition waivers, the aides said.
The tax bill would scale back the deduction for state and local taxes, allowing families to deduct only up to a total of $10,000 in property and income taxes. The deduction is especially important to residents of high-tax states like New York, New Jersey and California.
Business owners who report business income on their personal tax returns would be able to deduct 20 percent of that income.
The bill would repeal the mandate that most Americans get health insurance, a provision of the 2010 health care law. Republicans suffered a humiliating defeat this past summer when they were unable to dismantle the health care law after seven years of promises. Scrapping the individual mandate would provide them with more than $300 billion for deeper tax cuts while also undermining the Obama law.
Democrats have assailed it as unfairly tilted in favor of business and the wealthy.
Once the plan is signed into law, workers could start seeing changes in the amount of taxes withheld from their paychecks as early as February, according to the IRS. However, taxpayers won’t file their 2018 returns until the following year.
Corporate tax cuts would take effect in January, allowing businesses to immediately write off the full cost of capital investments.