House Republican leaders Monday unveiled major legislation to permanently extend President Trump’s 2017 tax cuts. The legislation would also fulfill his campaign promise to slash taxes on tips and overtime pay while reducing federal taxes on Social Security payments for low- and middle-income seniors.
House Ways and Means Committee Chairman Jason Smith, Missouri Republican, said the sweeping measure also would allow deductions for auto loan payments for cars made in America.
“We achieve an extension of Trump tax cuts and deliver on the president’s tax cut promises,” Mr. Smith told Republican lawmakers on an afternoon briefing call.
The long-anticipated bill is the centerpiece of a trio of House measures under consideration this week and part of the massive budget package, President Trump’s “big, beautiful bill,” that House and Senate Republicans hope to pass before the July Fourth congressional recess.
On Sunday, the Energy and Commerce Committee announced its plan to help pay for the historic tax cuts in part by overhauling Medicaid spending and curbing funding and policies aimed at replacing fossil fuels with renewable energy.
The cost-cutting plan also would strip federal funding from Planned Parenthood and other abortion providers.
“Savings like these allow us to use this bill to renew the Trump tax cuts and keep Republicans’ promise to hardworking middle-class families,” said a statement by House Energy and Commerce Committee Chairman Brett Guthrie, Kentucky Republican.
House lawmakers will start advancing the two measures Tuesday, when committee markups begin. A third measure, authored by the House Agriculture Committee, is expected to overhaul the nation’s food stamp program.
Democrats quickly condemned the Medicaid and health insurance changes. They said millions of people would lose health care.
The bill tweaks Medicaid, the nation’s fastest-growing entitlement, by requiring able-bodied adults to work, volunteer or undergo training.
To be eligible for the program, able-bodied people without young children or dependents must work at least 80 hours per month or perform the same number of hours volunteering or undergoing training. Eligibility would have to be verified twice per year rather than only once. The bill would cut a 5% increase in federal funding for Medicaid that was put into place during the COVID-19 crisis. It would also prohibit federal funding to states not ensuring participants are U.S. citizens.
The legislation adds additional state oversight requirements to prevent waste and fraud and imposes a cost-sharing requirement for families.
“Once again, Republicans have proven they have no loyalty or concern for the working people of this country. Their only agenda is helping the rich get richer,” said House Minority Whip Katherine Clark, Massachusetts Democrat.
The Ways and Means and Energy and Commerce measures curb billions of dollars in federal funding and policies to replace fossil fuels with renewable energy.
The Energy and Commerce Committee bill slashes funding to the Greenhouse Gas Reduction Fund. It also repeals federal funding to address air pollution, cuts funding to low-emission electricity programs and repeals spending for dozens of other related programs, including environmental and climate justice block grants. The Ways and Means Committee measure cuts green energy projects funded by the Biden-era Inflation Reduction Act.
The Congressional Budget Office determined that the changes to Medicaid, energy and other parts of the Energy and Commerce Committee bill would reduce the deficit by at least $880 billion over 10 years.
The Ways and Means Committee bill would hand much of the money back to taxpayers.
The bill would index the child tax credit for inflation and permanently boost the standard deduction for working families by $2,000.
The legislation would make additional “pro-family improvements” by lowering health care costs and expanding the availability and use of health savings accounts.
It would raise the estate tax threshold for family farms and, Mr. Smith said, end the “assault on gig workers” who are now subject to $400 IRS reporting requirements.
Seniors earning up to $75,000 annually on Social Security would be eligible for an additional $4,000 deduction.
Others, such as elite universities, could have higher tax bills.
The legislation would raise the endowment excise tax for certain universities so that the largest endowments, including those at Harvard University, would be subjected to the corporate tax rate of 21%, up from 1.4% under current law.
The bill would eliminate a $200 tax on gun silencers.
Republicans said the measure also would expand the state and local tax deduction, which was capped at $10,000 in the Republicans’ 2017 tax cut bill.
Republicans from high-tax states have warned they won’t vote for a bill unless the deduction limit is raised.
The Ways and Means Committee bill would allow up to a $30,000 deduction for most filers and be phased down for household incomes of $400,000 or more. For married individuals who file separate returns, the deduction would be capped at $15,000 and phased down for those earning $200,000 or more.
The legislation fulfills a key request from Mr. Trump in his quest to return manufacturing to the United States: a provision allowing for 100% expensing of equipment. It also increases the small-business tax deduction from 20% to 23%.
Job Creators Network CEO Alfredo Ortiz said the measure “will help Main Street usher in the next Golden Age of American prosperity.”
• Susan Ferrechio can be reached at sferrechio@washingtontimes.com.
Please read our comment policy before commenting.