House Republicans just made some enormous last minute changes to their tax bill - here's what they mean
- The House Ways and Means committee is wrapping up consideration of the Tax Cuts and Jobs Act.
- To meet a key requirement, Republicans introduced a slew of changes via what's known as a manager's amendment.
As the debate over the massive GOP tax bill winds down in the House Ways and Means Committee, its chairman added last-minute adjustments to the Tax Cuts and Jobs Act that could have wide-ranging effects.
Rep. Kevin Brady offered what's known as a manager's amendment on Thursday. The amendment contains a mound of edits added at the end of the committee's debate, designed to limit changes following the amendment's passage.
The manager's amendment is key for Republicans - prior to the changes, the bill went over its allotment for projected additions to the deficit. Since the bill is being considered under the budget reconciliation process, it can only add $1.5 trillion to the federal deficit over the next 10 years.
Here is a quick rundown of the biggest changes in the amendment and what they could mean:
- Adjustments to the tax rates for owners of pass-through businesses: The amendment would lower the marginal tax rate on income attributable to the owner of a pass-through entity, such as a limited-liability corporation or S-corporation.
- The rate would be 9% on the first $75,000 on business income, down from the current 12% rate, as long as the person makes under $150,000 total.
- After $225,000 of income, there would be a "bubble tax" to reclaim the new lower rate.
- The new lower rate would be phased in over five years, dropping every two years until it hits 9% in 2022.
- Reinstitutes the adoption tax credit: The proposed repeal of the adoption credit was the subject of intense debate, and the new amendment would keep the credit in the tax code.
- Requires a Social Security number to claim a child tax credit: This would be an attempt to crack down on unauthorized immigrants obtaining such a credit, which would be increased to $1,600 a child from $1,000.
The bill is expected to be passed by the Republican-controlled committee sometime Thursday afternoon.