The House Ways and Means Committee on November 9 approved the GOP’s amended Tax Cuts and Jobs Bill (HR 1) by a 24-to-16 party-line vote. Thus, the committee concluded a four-day markup of the bill. The measure now moves to the House Rules Committee and then the House floor. A vote is expected sometime during the week of November 13, House Majority Leader Kevin McCarthy, R-Calif., confirmed in a statement released after the bill’s approval.
Amended Tax Cuts and Jobs Bill
Chairman Kevin Brady, R-Tex., on November 9 offered his second amendment to the GOP tax reform bill, which was also approved by a 24-to-16 vote. Among other things, the amendment incorporates a 9-percent tax rate for the first $75,000 of taxable income for passthrough businesses earning less than $150,000. All types of businesses are eligible for the preferential rate, according to a summary of the amendment.
“This additional rate relief will allow American entrepreneurs to keep more of their income in those crucial early years – that time period that really makes or breaks a small business,” Brady said upon introducing the amendment during the markup. “We want more small business success stories in America, and this special nine percent rate for our startups will help make that possible.”
Additionally, the amendment changes the proposed tax rates at which businesses could repatriate foreign earnings currently held overseas. The new rates would be 14 percent for liquid assets and 7 percent for illiquid assets.
Democratic Amendments Rejected
No Democratic amendments were approved over the four-day markup. Way and Means Democrats consistently voiced criticism of the bill and markup process. “This GOP tax bill discussion has been inartful and indefensible,” said ranking member Richard Neal, D-Mass. “After four days, not one Democratic amendment has passed.”
Additional changes are expected to the bill before it reaches the House, but amendments are not likely to be permitted once on the floor. Full Republican consensus on the measure is unlikely because of the partial elimination of the State and Local Tax (SALT) deduction. Several House Republicans have been outspoken against the bill.
Another possible obstacle to House passage: the Senate and House bills will look very different. The Senate Finance Committee unveiled details of its GOP tax reform proposal on November 9. Differences between the two bills include the treatment of individual and corporate tax rates. The two bills, if passed, will likely move to conference committee to reconcile differences.
By Jessica Jeane, Wolters Kluwer News Staff