How Donald Trump’s Tax Plan Went Through Congress

One of President Donald Trump’s central campaign promises in 2016 was passing sweeping tax cuts and reforms. With Republican control of Congress, Trump was able to sign the Tax Cuts and Jobs Act (TCJA) into law just 11 months into his presidency. But the path through Congress involved complications and near disasters.

This post reviews the complex legislative journey and negotiations involved in crafting and passing Trump’s tax overhaul.

Origins of the Tax Plan

Donald Trump’s tax proposals took shape from several sources stretching back before his presidency [1]:

• His campaign plan was influenced by Reagan-era tax reform frameworks and conservative groups like the Heritage Foundation.
• The House GOP “Better Way” blueprint released in 2016 outlined principles similar to Trump’s eventual plan.
• Past Republican tax bills like ones proposed by Paul Ryan and Dave Camp laid groundwork that carried over.

This allowed Trump to pull from existing tax reform proposals Republicans had developed but failed to pass previously.

Initial Unveiling and Revisions

In April 2017, preliminary outlines of Trump’s plan emerged [2]:

• Treasury Secretary Mnuchin and National Economic Director Gary Cohn officially unveiled Trump’s tax plan on April 26, 2017.
• The initial proposal called for reducing the business tax rate to 15%.
• Negotiations with Congress eventually revised this to a 20% business deduction and 21% corporate rate.
• The plan went through additional revisions and negotiations before final legislative text.

As with any major bill, details evolved before arriving at the final version.

Congressional Budget Resolutions

Budget resolutions containing reconciliation instructions paved the way in Congress [3]:

• In January 2017, House and Senate Republicans passed budget plans including reconciliation directives for tax legislation.
• Reconciliation allowed tax reform to bypass the 60-vote threshold in the Senate and pass with a simple majority.
• Having simple majority reconciliation in place early helped set the legislative strategy.

Using budget reconciliation was crucial to avoiding the need for Democratic support.

House Passage of the TCJA

The House passed its version of the TCJA on November 16, 2017 [4]:

• The original House plan differed from the Senate plan in several respects.
• Last-minute revisions brought the House and Senate bills into closer alignment as both chambers had to pass identical legislation.
• The House approved the TCJA by a vote of 227-203 with no Democrats backing the bill and 13 House Republicans opposing it.

House passage represented a major step after prior failed attempts at tax reform.

Challenges During Senate Consideration

The Senate faced near disasters passing its version in early December 2017 [5]:

• Objections from several Republican Senators like Bob Corker almost derailed the effort.
• Ron Johnson refused to support the bill complaining it unfairly benefited corporations over small businesses.
• A last-minute “trigger” compromise to address deficits helped salvage passage.
• With a 52-48 margin, losing just 3 Republican votes would have doomed the legislation.

Narrow Senate control and moderates’ concerns made the Senate vote a tense high-wire act.

Revising Differences in Conference

With House and Senate bills passed, a conference committee reconciled differences [6]:

• Issues like mortgage deduction limits, SALT deductions, and pass-through treatment had to be settled.
• The corporate tax rate moved up slightly from the initial 20% in the Senate plan to the final 21%.
• Several minor revisions were required to ensure requisite Senate votes after conference.

Ironing out discrepancies between the chambers in conference could have jeopardized the entire effort.

Final Approval and Enactment

After conference revisions, both chambers passed identical legislation that was signed into law [7]:

• The Senate approved the unified bill 51-48 on December 19, 2017.
• The House passed it later the same day by a margin of 224-201.
• Donald Trump signed the Tax Cuts and Jobs Act into law on December 22, 2017.
• No Democrats from either chamber voted for the final plan.

After last-minute drama, Republicans delivered the $1.5 trillion tax overhaul to Trump’s desk just before year’s end.

Conclusion

Donald Trump made tax reform a chief priority entering office. Despite internal divisions and narrow control of Congress, Republicans powered through to pass the most ambitious tax overhaul in 30 years. While no Democrats came aboard, unified GOP control allowed the use of reconciliation to avoid the filibuster.

Tight margins meant compromises had to scale back some ambitions of the initial plan. But the finished product delivered material on Trump’s vision of lower rates and consolidated brackets benefiting American households and corporations. The tax reform journey was marked by eleventh-hour deals and near missteps at each stage.

But ultimately the stars aligned for Trump to fulfill a central campaign promise before his first year in office concluded.

References

[1] https://www.investopedia.com/taxes/trumps-tax-reform-plan-explained/

[2] https://www.whitehouse.gov/briefings-statements/president-donald-j-trumps-tax-cuts-historic/

[3] https://budget.house.gov/publications/report/fy18budgetreconciliationinstructions.htm

[4] https://www.congress.gov/bill/115th-congress/house-bill/1/actions

[5] https://www.nytimes.com/2017/11/30/us/politics/senate-tax-bill.html

[6] https://www.cbsnews.com/news/house-and-senate-republicans-reach-deal-on-tax-bill-vote-expected-next-week/

[7] https://www.congress.gov/bill/115th-congress/house-bill/1