House Budget Committee Approves Tool for Tax Reform Phase Two

The House Budget Committee has approved a tool that Republicans could use for tax reform phase two. A fiscal year (FY) 2019 budget resolution cleared the committee on June 21 by a 21-to-13 vote.

A budget resolution, if approved by both chambers, would allow Congressional Republicans to approve tax reform phase two without Democratic support, like the Tax Cuts and Jobs Act (TCJA) (P.L. 115-97). The resolution could be used as the legislative vehicle for a tax bill to be approved under the reconciliation process with a simple GOP majority.

Tax Reform Phase Two

House Ways and Means Committee Chairman Kevin Brady, R-Tex., has said a phase two tax cuts “outline” will likely be unveiled by August. Previously, House Majority Leader Kevin McCarthy, R-Calif., predicted that the House will approve the measure before midterm elections in November.

New Budget Resolution – New Tax Bill

The House Republican FY 2019 budget resolution, Budget for a Brighter American Future, calls for extending “pro-growth” provisions of the TCJA. Section 403 of the budget resolution text states that the Budget Committee chair may adjust budgetary levels in accordance with a Ways and Means Committee bill that extends pro-growth tax policies of the TCJA.

Individual Tax Cuts. Brady has consistently stated that tax reform phase two will focus on the individual side of the tax code. Further, making permanent the individual tax cuts enacted under the TCJA will be the “centerpiece,” of a phase two bill, Brady has told reporters. Additionally, the 20 percent passthrough deduction is also expected to be made permanent by the new bill. These TCJA provisions were enacted temporarily through 2025 in accordance with the Senate’s reconciliation rules. Under the Byrd rule, a measure must not increase the deficit beyond a 10-year budget window.

Democratic Criticism

Congressional Democrats remain largely united in their criticisms of the TCJA and House FY 2019 budget resolution. Although Brady has stated he was hopeful for Democratic support on a phase two tax bill, Republicans may be gearing up to fast track legislation with only Republican votes through reconciliation, similar to the TCJA.

“Six months ago, in the dead of the night, the GOP jammed through the [TCJA] lavishing tax cuts on big corporations and the wealthiest few,” Senate Minority Leader Charles E. Schumer, D-N.Y., said in a June 22 tweet. Likewise, Democratic Whip Steny Hoyer, D-Md., criticized the TCJA for “exploding the deficit.” According to Hoyer, the House’s FY 2019 budget resolution proposes paying for tax cuts for the wealthy by cutting health care and education.

Path Forward

House Budget Committee Chairman Steve Womack, R-Ark., has reportedly said that House leadership has not yet made the decision to use the budget resolution for a new tax bill. At press time, Brady’s office did not respond to an inquiry by Wolters Kluwer on June 22 about procedural intent for phase two legislative efforts.

By Jessica Jeane, Wolters Kluwer News Staff

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