WASHINGTON — In a significant move, Republicans in the U.S. House of Representatives successfully advanced President Donald Trump’s much-touted tax proposal early Thursday morning, passing it by a very slim margin.
All Democrats present voted against the bill, joined by Republican Representatives Warren Davidson of Ohio and Thomas Massie of Kentucky, while Rep. Andy Harris of Maryland, chair of the conservative House Freedom Caucus, chose to vote present. The final tally stood at 215-214.
This vote represented a critical triumph for Republican leadership, who dedicated the previous two months to drafting the legislation and finalized adjustments just days before the vote.
The comprehensive package, which spans over 1,000 pages and is accompanied by 42 pages of amendments, exemplifies a strategic effort to appease both moderate and hard-line factions within the party.
Rep. Keith Self, R-Texas, a member of the House Freedom Caucus, expressed a desire for more aggressive tax reductions but recognized the caucus’s efforts. “I was the last vote cast, and I wasn’t going to take the bill down,” he stated in an interview with NBC News.
Following the bill’s passage, Trump extended thanks to Speaker Mike Johnson and the House Republican leadership, saying he appreciated “every Republican who voted YES on this Historic Bill!”
Trump urged the Senate to act promptly, declaring, “Now, it’s time for our friends in the United States Senate to get to work, and send this Bill to my desk AS SOON AS POSSIBLE!” via a post on Truth Social. “There is no time to waste.”
Speaker Johnson has set an ambitious goal to get the legislation to Trump’s desk by July 4, stating, “Today proves that we can do that and we will do that.”
However, on Wall Street, sentiment was less optimistic regarding the tax cut proposal, with major indexes experiencing declines on Wednesday. Analysts and business leaders expressed concerns over the potential for heightened federal deficits as a result of the substantial spending involved in the tax cuts, contributing to worries about the nation’s long-term fiscal health. The yield on the 30-year Treasury bond reached 5.09%.
Opposition from Democrats remains firm, particularly regarding the drastic reductions to the social safety net that would fund some of the promised tax cuts. A nonpartisan analysis from the Congressional Budget Office highlighted that, should the bill become law, households in the lowest income decile would see a decrease in resources, while those in the highest decile would benefit.
The legislation must now navigate a challenging path through the Senate. It will be reviewed under budget reconciliation rules, enabling it to pass with a simple majority rather than the usual 60 votes required for most bills. Yet, several Republican senators have already indicated that significant modifications will be necessary before they can support the legislation.
The version that emerged from the House included numerous amendments aimed at addressing the needs of various factions within the House GOP.
For instance, a two-year acceleration of work requirements for Medicaid recipients was enacted, reflecting a conservative triumph. Additionally, the amendments also include a significant increase in the cap on state and local tax deductions for federal income tax filers, raising it from the current $10,000 to $40,000 for those earning under $500,000.
Rep. Mike Lawler, R-N.Y., who held out until the legislation included the SALT cap increase, asserted its significance in stimulating the economy and providing market stability. “The fact is, we delivered on something; this is a big promise that I made to my district,” he commented during an appearance on Finance Newso’s “Squawk Box” following the vote.
In the lead-up to the vote, the House Rules Committee engaged in a marathon 21-hour session of debate and amendments to meet the deadline set by Johnson for Memorial Day.
The broader legislative package strives to fulfill Trump’s primary campaign pledges, including measures to make permanent the tax cuts enacted in 2017 and to abolish taxes on tip income.
