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House narrowly passes $4 trillion budget, clears way for Trump's tax reform plan

The House narrowly passed the 2018 budget 216-212 on Thursday. “Tax reform will help reignite the American dream,” House Speaker Paul Ryan (R-Wis.) told reporters at his weekly news conference. (Chip Somodevilla/Getty Images)

The House of Representatives on Thursday narrowly passed a $4 trillion budget that paves the way for President Donald Trump's tax reform plan.

The House passed the Senate's budget resolution by a vote of 216-212. The House made no changes to the budget that passed in the Senate last week with no Democratic votes.

Passing the budget resolution was key for tax reform because the measure includes instructions for budget reconciliation. The reconciliation process cannot be filibustered, which allows a tax-related bill to pass the Senate with a majority of votes, according to Business Insider. Since the GOP holds only 52 seats in the Senate, reconciliation is key to avoiding a cloture motion to end debate, which requires 60 votes.

The tax bill is the top item on the GOP agenda, and getting a budget passed in Congress is a major win for President Donald Trump, ABC News reported.

What are Republicans saying?

“By passing this budget today, House Republicans just provided the legislative runway for pro-growth tax reform,” House Ways and Means Committee Chairman Kevin Brady (R-Texas) said. “Our successful vote will allow us to move forward quickly on delivering the first overhaul of America’s tax code in more than three decades.”

The plan is expected to cut taxes for working families.

“Tax reform will help reignite the American dream,” House Speaker Paul Ryan (R-Wis.) told reporters after the vote. “It will help bring us back to a place of confidence, freedom, happiness and a stronger, healthier economy. And this budget that the House just passed, 20 minutes ago, brings us closer to making that dream a reality.”

Fox News reported that Brady is expected to release the tax bill text on Nov. 1.

What could tax reform entail?

Republican tax-reform framework proposes simplifying the tax code and reducing business taxes.

It also proposes the elimination of the state and local tax deduction, known as the SALT deduction, Business Insider reported. The deduction allows people to shave off what they pay in state and local taxes from their federal tax bill.

However, Trump opposes eliminating the SALT deduction because it could hurt the middle-class taxpayers, according to Bloomberg.

Business Insider reported that eliminating the SALT deduction, Republicans would offset a significant number of their planned tax cuts — saving $1.3 trillion over 10 years, according to an analysis by the Tax Policy Center.

On Wednesday, Brady told reporters "he's still looking at curtailing tax-free deposits in 401(k) accounts," Fox News said. It's a move that could raise revenue in the near term as retirement savings shift to Roth-style accounts that are funded with after-tax earnings.

It's also a move that Trump opposes.

“There will be NO change to your 401(k). This has always been a great and popular middle class tax break that works, and it stays!” Trump tweeted Monday.

What about the Republicans who didn't vote for the budget?

Eleven of the 20 Republicans who opposed the budget are from high-tax states, such as California, New York and New Jersey. Several members who previously supported the House plan opposed the measure over worries about the SALT deduction.

“This is a big issue, and it has to be resolved,” Rep. Tom MacArthur (R-N.J.) told the New York Times on Wednesday. “Tax reform is good for the country; it’s just not good for the country when it’s on the back of six states. That’s the problem.”

How about the Democrats?

According to ABC News, Democrats are arguing that the budget's tax cuts will pad the bank accounts of the wealthy and the balance sheets of corporations, while delivering modest relief, if any at all, to middle-income taxpayers.

"These tax cuts will not create an economic boom but will instead lead to a higher concentration of wealth among the rich, while dramatically increasing deficits and debt," Rep. John Yarmuth (D-Ky.) said.

More things you should know:

Tax cuts advocate has a special message for lawmakers burdening small business

Trump says ‘NO change’ to 401(k) plans in GOP tax reform plan

Liberal students love ‘Bernie Sanders’ tax plan.’ What they’re hearing is actually Trump’s tax plan.

3 Things you should know about Trump's tax reform plan

One last thing…
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