How Republicans Closed the Deal on Tax Cuts

With late support from Senators Bob Corker and Marco Rubio on a package finalized Friday, the GOP is on the precipice of a major legislative victory next week.

J. Scott Applewhite / AP

Updated on December 15 at 6:14 p.m. ET

It’s all over except the voting.

Republican negotiators representing the House and Senate on Friday morning signed off on a final version of legislation that will, at a cost of up to $1.5 trillion, deliver a steep permanent tax cut to corporations and more modest, temporary reductions for individuals and families. In the last hours of tweaks, the GOP boosted a benefit for working families at the behest of Senator Marco Rubio of Florida, likely securing his vote and the support the party needs to pass the bill next week. And they flipped the one Republican senator who had voted no on the chamber’s original bill earlier this month, Bob Corker of Tennessee.

The House and Senate must each hold final votes on the tax plan next week, and given the GOP’s fractious and shaky majority, there’s always the potential for last-minute drama. But the conference-committee report signed on Friday won’t be subject to amendments, and negotiators evinced little worry that the landmark deal—which represents the largest changes to the tax code in more than 30 years—would fall through. House Majority Leader Kevin McCarthy announced the House would vote on Tuesday, with the Senate expected to send the plan to President Trump’s desk soon after.

In a testament to the fast-moving, partisan process, however, Republicans withheld the last details of their bill until 5:30 p.m. on Friday—a time usually reserved in Washington for announcing unceremonious departures and delivering other dreary news. Among other provisions, the legislation would reduce the corporate tax rate from 35 percent to 21 percent, slightly cut rates and double the standard deduction for individuals, double the child tax credit, and effectively repeal the Affordable Care Act’s individual insurance mandate beginning in 2019. The final compromise would cap the deduction for state and local taxes at $10,000, but it would preserve popular deductions for medical expenses, student loan interest, and graduate student tuition.

GOP leaders locked down the critical Senate votes one-by-one over the last several weeks through a combination of old-fashioned horse trading and appeals to unity. Earlier in the month, they bowed to Wisconsin Senator Ron Johnson’s insistence on more generous treatment of “pass-through” businesses like the one he partially owns. They changed a tax break for capital expensing to assuage Senator Jeff Flake of Arizona and gave him a verbal commitment to work together on immigration. They adopted a number of policies demanded by Senator Susan Collins, although the Maine moderate likely will be left to hope that Senate Majority Leader Mitch McConnell will keep his promise to enact a pair of bipartisan health-care bills that she extracted for her vote.

That left Rubio as the final apparent holdout, but the Florida Republican settled on a compromise in his bid to extend an expanded child tax credit to millions more families on the lower end of the income scale. The tax bill had already doubled the base credit to $2,000 per kid, but Republicans initially had made only $1,100 of that money refundable. The result was that many working-class families—earning, say, between $20,000 and $50,000 a year—would not have enough taxable income to take full advantage of the credit. Rubio and Senator Mike Lee of Utah campaigned to make the $2,000 fully refundable, but they accepted the GOP’s offer of $1,400.

“For far too long, Washington has ignored and left behind the American working class. Increasing the refundability of the Child Tax Credit from 55% to 70% is a solid step toward broader reforms which are both Pro-Growth and Pro-Worker,” Rubio tweeted on Friday, indicating his support.

Senator John McCain of Arizona remains hospitalized due to side effects of his brain-cancer treatment, but the remaining uncertainty over the outcome dissipated Friday afternoon when both Rubio, and more surprisingly, Corker, hopped on board. The Tennessee Republican opposed the bill initially because it added too much to the deficit, but with the legislation seemingly headed for passage anyway, he changed his mind. “After great thought and consideration,” he said in a statement, “I believe that this once-in-a-generation opportunity to make U.S. businesses domestically more productive and internationally more competitive is one we should not miss.” The GOP has more leeway in the House, where just 13 Republicans voted no on the initial bill in November. There’s been little uprising over potential changes since then.

Still undecided is Collins, who supported the Senate proposal only after winning a series of concessions and promises from GOP leaders that might not bear out. As part of an agreement with McConnell, she had wanted the Senate to vote first on two bills that she believes would mitigate the impact of repealing the Affordable Care Act’s individual mandate in the tax legislation. One would restore for two years payments to insurers that President Trump canceled earlier this fall, while the other would fund state reinsurance programs aimed at reducing premiums by offsetting the cost of covering the most expensive patients.

Yet it’s likely the Senate will vote first on the tax bill, forcing Collins to hope that McConnell and other Republican leaders will follow through with the health-care bills afterward. The hope is that once the House sends over a year-end spending bill next week, the Senate will attach the health-care bills and send it back to the House for final passage. But with conservatives opposed to the proposals, that is not guaranteed to occur.

After winning the gratitude of Democrats and liberal activists for helping to vote down the GOP’s efforts to repeal Obamacare, Collins has come under harsh criticism for her support of the tax bill and particularly its repeal of the individual mandate. “Leadership. Consistency. Principles. Objective nonpartisan analysis. What happened to Susan Collins?” asked Topher Spiro, of the left-leaning Center for American Progress.

Collins spokeswoman Annie Clark told me on Friday she remains “very confident” that the health-care bills will ultimately become law. But given the likely process in the Senate next week, it is largely a matter of trust.

Collins’s vote now comes down to the provisions in the final tax bill, and Clark said she would not announce her position until she pored over the 500-page legislation this weekend. She has voiced concerns about lowering the top individual income rate to 37 percent, but she won apparent victories in other areas. The conference report is likely to include a more generous allowance for the deduction of state and local taxes and won’t eliminate a popular deduction for medical expenses—two of Collins’s priorities. Nor will it fully repeal the estate tax, which she had said she was opposed to.

But the reason Collins seems likely to back the tax bill is much simpler: Unlike during the health-care debate, she supports the underlying goal of what Republicans are trying to do.

Ultimately, that also helps to explain how Republicans came to be on the precipice of this first major legislative victory. What the debate over taxes has revealed is not just that the party is desperate to show they can have something to show for their majority, it’s that tax cuts remain a singular unifying force for the modern GOP. That was enough to overcome the many differences over the particulars of tax policy, as well as the polls warning Republican lawmakers that this legislation is not something the public seems to want. And it’s why, despite those many obstacles, Trump is likely to have a bill to sign into law next week.