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Will your taxes go up or down? The five biggest questions on the GOP plan

The No. 1 question I get from readers lately is:

How likely is the Republican tax plan to become law?

Compass Point, a research firm, puts the odds of the tax-cut bill making it to President Donald Trump's desk at 65 percent. Goldman Sachs, the investment bank that has a lot of alums in the White House, is telling clients the odds are now at 80 percent.

"The tax reform debate is moving forward faster than we or most other observers expected," wrote Goldman's economics team.

The likelihood of tax cuts actually happening in 2018 got a major boost last week once the House of Representatives passed its version of the Tax Cuts and Jobs Act, but it's not a slam dunk from here. In sports terms, the GOP has just completed a solid first quarter. There's a lot more game to play.

Up next are the Senate Republicans, the same group that killed the Affordable Care Act repeal the House moved on in July. They plan to vote on their version of the tax bill shortly after Thanksgiving. Trump wants the final bill on his desk before Christmas, but even Goldman Sachs thinks that's unlikely. There are simply too many differences between the two chambers' legislation. Finding a compromise in conference committee is going to take time - if it's even possible.

"The conference committee is going to age all of us terribly," joked Isaac Boltansky, director of policy research at Compass Point.

Trump wants a tax-cut bill. It's the centerpiece of his economic agenda. Here are the five key hurdles that remain for passage.

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Should this just be a tax bill? Or a tax and health-care bill?

As part of their legislation, Senate Republicans are trying to repeal the "individual mandate" that requires nearly all Americans to buy health insurance or pay a penalty in their tax bill. Repealing it frees up about $300 billion in savings that can be used to make corporate tax cuts permanent (the money could also be used to make tax cuts for families permanent, but the Senate bill does not do that). But axing the individual mandate would also leave 13 million Americans without health insurance and a lot of people earning incomes of $10,000 to $30,000 worse off, according to calculations from Congress's nonpartisan Joint Committee on Taxation.

A number of Washington insiders think it was a mistake to insert health care into the Senate tax bill. The House bill does not include this provision, so it creates a major difference that has to be reconciled. It also might not even pass the Senate. Republican Sens. Lisa Murkowski, Alaska, and Susan Collins, Maine, said they don't like this approach. The bill can afford to lose only two Republican votes. Trump initially pushed the Senate to include the mandate repeal, but the White House has since backed off, indicating that the president wants a tax bill above all else.

"There are two ways to read inclusion of individual mandate [in the Senate bill]: It was either desperation, which might be part of it, or it showed their commitment to do just about anything to get it done," said Boltansky. He predicts the Senate will drop it.

Does the bill do enough for the middle class?

Trump and Republican leaders are selling this tax bill as a big benefit for the middle class. But the Joint Committee on Taxation, the official number cruncher on tax bills, has taken a look at what would happen to the middle class under the GOP legislation. It's not so rosy. In the House bill, nearly 10 percent of people earning $50,000 to $75,000 a year would have to pay more in taxes by 2021. Six years later, 31 percent of the middle class would be paying more.

The Senate bill looked better until Republicans added the repeal of the individual mandate. The JCT score of the latest Senate bill shows that by 2027, most families that earn under $75,000 a year would pay more in taxes, while people earning more than $100,000 would keep their tax cut. The results are playing right into a key Democratic talking point that the bill does a lot for the rich but little to nothing for the poor and middle class.

Collins has indicated she wants more breaks for the middle class. One of the biggest issues is that major tax savings for the middle class end in 2023 in the House bill and in 2026 in the Senate bill, while the tax cuts for large corporations remain forever.

Is the GOP doing enough for small businesses?

The heart of the Republican plans is lowering taxes for businesses. But serious concerns have been raised about whether too much of the bounty would go to big businesses (C-corporations) and not enough would be done for small businesses. One of the strongest opponents of the House GOP tax bill was the National Federation of Independent Businesses, a key small business lobby that has traditionally backed Republicans. NFIB ultimately ended up supporting the final House version, but its initial opposition was a wake-up call.

Over in the Senate, Sen. Ron Johnson, R-Wis., said he's "no" on the current bill because he doesn't think it does enough for "pass-through" businesses (S-Corps, LLCs, partnerships, etc), which "pass through" their business income to the owner's individual tax rate. The House bill spends more money trying to help pass-through businesses, according to JCT's cost analysis. Overall, the House bill spends 74 percent of the money on tax cuts for businesses, while the Senate bill marks 53 percent for business tax cuts and the rest for individuals.

But the details matter: Are all the benefits going to a handful of super wealthy pass-through companies like hedge funds and law firms, or are mom-and-pops benefiting, too? The House and Senate have very different provisions right now for pass-through businesses. As business owners learn more about the bills, they are likely to speak out.

How much higher will America's $20 trillion debt get?

For years Republicans railed against America's growing debt. It topped $20 trillion earlier this year. But the GOP tax plan would add another nearly $1.5 trillion to the debt over the next decade, according to JCT and the Congressional Budget Office. A few Republican senators, most notably Bob Corker, Tenn., and Jeff Flake, Ariz., have expressed concerns about the bill's price tag. The original idea was to lower taxes but pay for them by eliminating a lot of tax loopholes. That didn't happen. Corker and Flake are critics of the president and might be willing to take a bold stance against the bill.

The White House argues that people shouldn't be paying attention to the $1.5 trillion figure (even though it's the calculation from the official, nonpartisan scorekeepers).

"The idea this blows a hole in the deficit is just incorrect," said economist Kevin Hassett, head of Trump's Council of Economic Advisers, on Friday. Hassett claims the tax cuts will unleash so much growth that they will pay for themselves. But that didn't happen under Republican Presidents Ronald Reagan or George W. Bush, and no mainstream economists think that will happen now.

The bill could die in conference committee.

In addition to some key hurdles above, the House and Senate also differ on how they deal with the state and local deduction (SALT) provision in the current tax policy. About a third of taxpayers-- many of whom earn more than $100,000 in annual income -- itemize their deductions, including deductions for property taxes and the taxes they pay to their states and municipalities. Republican lawmakers from high-tax states, such as New York, New Jersey and California, balked at the initial plan to do away with all SALT deductions. The House bill includes a compromise to keep some of the deductions (mostly for property taxes). But the Senate bill is a full SALT elimination. This could be a major sticking point among the many line-by-line differences between the bills.

Perhaps the easiest compromise would be not to cut the corporate tax rate so much. At the moment, both the House and Senate reduce the top rate for big businesses from 35 percent to 20 percent. The average tax rate now for S&P 500 companies is just over 25 percent, according to research firm S&P Global. Collins has floated the idea of only lowering to 21 percent. Some on Wall Street now think it might end up being more like 22 percent or 23 percent if Republicans need more money to give breaks to small businesses and/or the middle class. But these are tough negotiations, and the lobbyists will be watching.

So far, the Republican tax proposals remain deeply unpopular. Even Fox News tweeted out a Quinnipiac poll last week showing that a majority of Republicans - 52 percent - disapprove of this legislation. Those aren't good numbers.

But GOP strategists and insiders argue that the bill is a core Republican philosophy: Lowering taxes unleashes growth. There's a belief in the GOP ranks that once the bill is passed, the economy will do so well that voters will change their minds.

"As important as health care was to Republicans - they promise to repeal Obamacare - it's not quite the same thing as tax cuts, which is supposed to be the Republicans' specialty and their core competency. It built the modern party," says James Pethokoukis of the right-leaning American Enterprise Institute. "I don't think a lot of Republicans want to be the one who kills this 30-year dream of more tax reform."

But veterans of the Reagan era, like Peter Davis of Davis Research, like to remind people that the 1986 tax reform measure "almost died at least a dozen times." Similar battles await this time around. In 1986, Reagan's popularity was around 60 percent for most of the year, according to Gallup. He could rally Congress in a way that Trump has struggled to do, especially with the president's approval rating back below 40 percent. Given the bigger political picture, Davis is more bearish about a final bill getting done.

The president has called for Congress to send him the ultimate "Christmas present." Those who have seen this process play out before say it would be better described as a "Christmas miracle." The optimists say it's likely to get done in January or February. The pessimists think the GOP is a lot more fractured than people realize, even on taxes.

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