On October 26th, the House of Representatives approved the budget resolution previously passed by the Senate. Because the House approved the Senate’s budget resolution without making any changes, a conference committee will not be necessary. Avoiding a conference committee speeds up the timeline for tax reform. The budget resolution passed 216-212 in the House. All Democrats and 20 Republicans voted against the budget resolution. As expected, most Republicans who voted against the budget resolution were those who do not want the state and local tax deduction (“SALT deduction”) to be eliminated or scaled back. Repealing the SALT deduction in its entirety could generate more than $1 trillion in revenue that would help offset the proposed tax cuts. Part 2 of “Tax Reform Now” describes why repealing the SALT deduction is a contentious issue. Since the budget resolution included the budget reconciliation instructions, a tax reform bill can now be approved by a majority vote in the Senate. Part 5 of “Tax Reform Now” explains in greater detail how the budget reconciliation instructions impact long-term tax reform.
Republican leaders want to pass a tax reform bill through Congress before Thanksgiving. Thus, Republicans have approximately three weeks to achieve this goal. Because the Senate’s budget resolution was passed by the House, the House and Ways Means Committee is now tasked with drafting the tax reform bill. Kevin Brady, the House Ways and Means Committee Chairman, announced that a draft of the tax reform bill should be released on November 1st. After this draft is released, the House Ways and Means Committee will hold a mark-up session starting on November 6th. In a mark-up session, the House Ways and Means Committee members will debate, propose amendments, and rewrite the proposed tax reform bill. While this mark-up session is going on, the Senate Finance Committee will be gearing up for its own mark-up session.
Since the release of President Trump’s framework for tax policy reform in late September, the details of any tax reform legislation have been shrouded in mystery. Republican leaders have not yet reached a consensus on thorny issues. Nevertheless, the House Ways and Means Committee’s draft of the tax reform bill will provide answers for individuals and businesses anticipating significant tax changes. When the draft of this tax reform bill is released, “Tax Reform Now” will provide a summary of the proposed changes.
We hope this update has been helpful. As always, please let us know if you have any questions.