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The U.S. Capitol Building is lit at sunset in Washington, U.S., December 20, 2016. REUTERS/Joshua Roberts(reuters_tickers)
By David Morgan and Amanda Becker
WASHINGTON (Reuters) - The Republican-controlled U.S. Congress approached a major test on Thursday of its ability to enact sweeping tax cuts, as lawmakers prepared for their first full-scale vote on tax legislation.
President Donald Trump met with Republicans from the House of Representatives at the U.S. Capitol and urged them to pass their bill to cut federal tax rates on corporations, small businesses and individuals.
Trump wants to sign a tax package into law before the end of the year, giving him and his Republican allies their first major legislative accomplishment of 2017.
"He said that we’ve got to get this tax bill passed to get the economy moving," U.S. Representative Matt Gaetz told reporters. Trump talked to lawmakers for about 20 minutes and left the Capitol without speaking to reporters.
U.S. House Speaker Paul Ryan told Fox News he was confident his chamber had the votes to pass their version of the plan. A vote was expected early on Thursday afternoon.
"Big vote tomorrow in the House. Tax cuts are getting close!" the Republican president tweeted on Wednesday night.
But the tax overhaul has encountered resistance in the Senate, where the Republicans' narrow majority means they have to keep almost everyone in the party on board. The Senate version has faced criticism from some Republican lawmakers, including Senator Susan Collins, who helped sink a Republican effort to repeal Obamacare earlier this year.
Senate Republicans made the risky decision to tie their tax plan to a repeal of the mandate for people to get healthcare insurance under former President Barack Obama's Affordable Care Act, exposing the tax initiative to the same political forces that wrecked their anti-Obamacare push.
Republican U.S. Senator Ron Johnson said Trump called him on Wednesday night after Johnson announced his opposition to the current Senate plan over what he said were unequal rates for small businesses and non-corporate enterprises known as "pass-throughs," versus corporations.
Still, Johnson said he was hopeful a final bill could be passed by year's end.
"I'm trying to fix it, and I want to vote yes," Johnson told CNBC, adding Trump told him he would meet with Treasury officials on the issue. The president's public schedule did not list any Department of Treasury meetings for Thursday.
Republicans have long promised tax cuts and see enacting the legislation as critical to their prospects of retaining power in Washington in the November 2018 congressional elections. Despite controlling the White House and Congress, Republicans so far have no major legislative achievements to show voters.
"The American people have waited years for a fair, simple, and competitive tax code. Right now, in this moment, we stand on the doorstep of delivering," Kevin Brady, chairman of the tax-writing House Ways and Means Committee, said during the House tax debate.
The House bill, which is estimated to increase the federal deficit by nearly $1.5 trillion (£1.13 trillion) over 10 years, consolidates individual and family tax brackets to four from seven and reduces the corporate tax rate from 35 percent to 20 percent.
It also would scale back or end some popular tax deductions, including one for state and local income taxes, while preserving a capped deduction for property tax payments.
Democrats have condemned both the House and Senate tax plans as giveaways to the wealthy and U.S. corporations, pointing to analyses showing millions of Americans could end up with a tax hike because of the elimination of popular deductions. Repealing or cutting some deductions is a way to offset the revenue lost from tax cuts.
"This is not a tax plan. This is a tax scam," said Representative Maxine Waters, a California Democrat.
Nonpartisan congressional analysts say the provision to repeal the health insurance mandate in the Senate version would drive up premium costs and cause some 13 million Americans to lose coverage. It also sets individual tax rate cuts to expire while reductions for corporations are permanent.
The Senate and House tax plans must eventually be reconciled and merged into a final plan that can pass both chambers before Trump signs it into law.
"We'll find a middle ground and we'll get it to the president's desk ... This is a big deal for us," Republican Representative Tom Cole told MSNBC.
The main challenge facing Republicans remains the 100-seat Senate, where they can lose no more than two votes from their 52-48 majority if they hope to enact tax reform.
Senator John McCain, a Republican who also voted against his party's healthcare overhaul effort earlier this year, and his colleagues Bob Corker and Lisa Murkowski, are considered critical votes along with Collins and Johnson.
(Reporting by David Morgan and Amanda Becker; Additional reporting by Susan Heavey, David Alexander and Katanga Johnson; Editing by Frances Kerry and Alistair Bell)