Government affairs

Following House and Senate passage, Congress has now approved the final version of the sweeping Republican overhaul to the U.S. tax code (H.R. 1), formerly referred to as the “Tax Cuts and Jobs Act.”

Passage comes following a second House vote today, after Senate Democrats identified three provisions that violated the “Byrd Rule,” a Senate rule that governs the use of the Recompilation process. As a result, the bill was forced to change its title, remove a provision regarding the use of 529 educational savings accounts to cover expenses of home-schooling, and exempt universities with fewer than 500 tuition-paying studentsfrom paying a new endowment excise tax.

The final bill drops the corporate tax rate from the current 35 percent to 21 percent permanently, provides huge incentives for companies to send American jobs overseas and move profits to tax havens, and gives new breaks for “pass-through” businesses whose owners pay taxes on their individual returns. It lowersrates for most individuals temporarily, but in the years to follow,those rates gradually increase until 2027 when an estimated 84 percent of Americans will pay more taxes and only those making $200k+ will benefit. Additionally, the bill removes or lowers certain deductions working families rely on, effectively raising their taxes overall despite lowering rates. Finally, and among other provisions, the bill removes the Affordable Care Act’s (ACA) individual mandate, which will raise health insurance premiums for a majority of Americans and could result in up to 13 million Americans losing insurance by 2027.

Notably, not a single Democrat or Independent supported the bill in either chamber. However, the following House Republicans opposed the final measure: Dan Donovan (R-NY), John J. Faso (R-NY), Rodney Frelinghuysen (R-NJ), Darrell Issa (R-CA), Walter B. Jones (R-NC), Peter T. King (R-NY), Leonard Lance (R-NJ), Frank A. LoBiondo (R-NJ), Dana Rohrabacher (R-CA), Christopher H. Smith (R-NJ), Elise Stefanik (R-NY), and Lee Zeldin (R-NY).

According to the Joint Committee on Taxation report released last week, any growth effects of the tax bill would lower the estimated $1.45 trillion price tag by at most $407 billion dollars, thereby leaving a massive increase in the federal budget deficit. This opens the door to future budget cuts to letter carrier pensions and health benefits, as well to vital programs such as Medicare, Medicaid, and Social Security.

Throughout House and Senate consideration of H.R. 1, NALC members lobbied aggressively against the bill by calling their legislators and asking them to vote against it. NALC President Frederic Rolando’s letter to the House and Senate on the final bill can be read here.

The bill was expected to be signed into law by the President by Christmas; however, the issue of waiving the pay-as-you-go law (Paygo) must be addressed and therefore the President may wait to sign the bill until January to give Congress time to address Paygo. If Congress fails to address the issue in the continuing resolution being negotiated, the Office of Management and Budget will require automatic spending cuts to mandatory spending programs over ten years (known as a sequester).