House Passes Tax Reform Vehicle; Bill Release Expected November 1

The House narrowly passed the Senate-approved fiscal year 2018 budget resolution (HConRes 71 ) by a 216-to-212 vote on October 26. The measure opens the door for tax reform legislation to be introduced in the House during the week of October 30 and move through the Senate under the reconciliation process, which requires only a Republican majority vote for approval.

House Ways and Means Committee Chairman Brady, R-Tex., released a statement on October 26 announcing that the Republican tax bill will be introduced on November 1, with a markup of the legislation beginning on November 6. “By passing this budget today, House Republicans just provided the legislative runway for pro-growth tax reform,” Brady said in a statement.

President Trump has been meeting with House and Senate Democrats in attempts to achieve some Democratic support (TAXDAY, 2017/10/19, W.1 ) on tax reform. However, Trump seemed confident in Republican unity prior to the budget vote, tweeting “[d]o not underestimate the unity within the Republican party.”

GOP Support

However, garnering full Republican support does not, at this time, seem to be an easy win for congressional leadership. Lawmakers are reportedly still at odds over how to handle the state and local tax (SALT) deduction, as well as Code Sec. 401(k) retirement plan contribution levels in the forthcoming tax reform legislation. Trump seemed to get ahead of ongoing discussions among congressional taxwriters when tweeting earlier this week that taxpayers would see no change in their 401(k) plans (TAXDAY, 2017/10/24, W.1 ). Twenty Republicans voted against the budget resolution containing reconciliation instructions for tax reform to voice disapproval of the possibility that the legislation will repeal the SALT deduction, according to several reports. Brady said on October 25 that he expects a solution will be reached on the SALT deduction prior to the bill’s release next week.

Although the Trump administration and top House and Senate lawmakers unveiled a “unified” tax reform framework in September (TAXDAY, 2017/09/28, C.1 ), the Senate is also expected to release its own tax reform bill. “The Fiscal Year 2018 Budget Resolution, with a $1.5-trillion instruction to the Senate Finance Committee (SFC), will allow Finance Committee members to produce a comprehensive tax reform bill…with a final budget in place, the Senate Finance Committee is ready to continue its work to advance a comprehensive tax overhaul,” SFC Republicans said in an October 26 press release.

Democrats’ Reaction

Top Senate Democrats, however, remain none too pleased with GOP efforts toward tax reform.” This morning the House passed the budget, so now it’s on to tax. This debate is coming. It’s going to happen at the speed of light,” SFC ranking member Ron Wyden, D-Ore., said on the Senate floor on October 26. Democrats have remained largely united against GOP tax reform proposals, criticizing the Framework provisions and downwind GOP discussions for primarily benefiting the wealthy. “They are rushing their tax giveaway to big corporations and the wealthy through the Congress so quickly that nobody catches on,” Wyden said.

Weighing in on the SALT and 401(k) plans controversy, Senate Minority Leader Charles E. Schumer, D-N.Y., criticized Republican discussions of possible removal of the deduction and lowering of contribution limits. “The bottom line is that any Republican plan that limits SALT is the equivalent of robbing middle-class families of a tax benefit and handing it over to the wealthiest Americans and biggest corporations,” Schumer said on the Senate floor on October 26. “If that weren’t enough of a reason to vote no, Mr. President, the Republican leadership is still debating capping pre-tax contributions to 401(k) plans,” he added.

By Jessica Jeane, Wolters Kluwer News Staff

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All stories by: CCHTaxGroup