On October 5, the House of Representatives took the first step in overhauling the United States tax code when it passed a budget resolution. This budget resolution would allow a future tax bill to pass in the House and the Senate without the support of any Democrats. In a 219 to 206 vote, 18 Republicans and all Democrats voted against the House’s budget resolution. As discussed in last week’s edition of “Tax Reform Now”, some Republican Representatives voted against the budget resolution because of the potential repeal of the state and local tax deduction. The House’s budget resolution now serves as a blueprint for federal spending during the 2018 fiscal year. This week’s edition of “Tax Reform Now” will discuss the reconciliation language in the House’s budget resolution along with the next steps that legislators will take.
The House’s budget resolution includes language for a procedure called reconciliation, which will allow a future tax bill to avoid a filibuster in the Senate. Instead of needing 60 votes to overcome a filibuster, Republicans can pass a tax bill in the Senate with 51 votes. If there is a tie, Vice President Pence would then cast the deciding vote. This parliamentary language was added because the Republicans only hold 52 seats in the Senate. However, in order to use reconciliation and avoid a filibuster, the House and Senate must first agree on an identical budget resolution for the 2018 fiscal year. If the House and Senate can decide on an identical budget resolution, a tax bill that satisfies the approved budget conditions will avoid a filibuster.
The House’s budget resolution discusses how to eliminate annual budget deficits by the end of the decade. The House assumes its proposed budget resolution will not add to the federal deficit by providing $203 billion in spending cuts. The Senate Budget Committee has advanced its own budget resolution, which would allow legislators to add up to $1.5 trillion to the budget deficit. The Senate Budget Committee’s resolution must be approved by the Senate. The Senate will vote on this budget resolution next week. If the Senate passes this budget resolution, the House would need to pass the Senate’s version of the budget without making any changes, or else the budget must go to a conference committee to resolve any differences. The House and Senate would vote again on the budget resolution offered by the conference committee. If the budget resolution is approved by the House and Senate, the House Ways and Means Committee would then meet to draft a tax bill.
We hope this update has been helpful. As always, please let us know if you have any questions.