Summary
It’s another crucial week for Congressional Republicans, as the majority party tries to expedite its major tax overhaul through both chambers of Congress in an effort to reform the tax code by the end of the year. Last week, the House Ways and Means Committee passed the Tax Cuts and Jobs Act (TCJA) (H.R. 1) out of committee on a party-line vote, while the Senate Finance Committee released a description of the chairman’s mark for their version of the bill that is being marked up throughout this week.
During the markup, the upper chamber will look to mend some intraparty divisions, as well as solve some of the complex mathematical issues that are needed to ensure that the bill follows the budgetary constraints set by the reconciliation process. Under budget reconciliation rules, TCJA can only add $1.5 trillion to the federal deficit over the first 10 years it is enacted. In the House, leaders are hoping for final passage of their version of TCJA in time for the Thanksgiving break — but they still face significant hurdles as the bill heads to the House floor this week.
In a chart, TRP Health Policy outlines the provisions that have been proposed by lawmakers in both chambers, as well as the provisions of the current law. While the proposals overlap in principle, the Senate proposal breaks from the House on provisions such as: (1) the level of top individual tax rates; (2) the number of individual tax brackets; (3) the timing of a corporate tax-rate cut and; (4) the particulars of estate tax changes. Among the hotly contested issues, the deduction for state and local taxes (SALT) is emerging as a key point of contention between the House and Senate. The Senate version would repeal the SALT deduction entirely, whereas the House bill would repeal SALT but preserve a $10,000 property tax deduction. It also remains to be seen how both chambers will reconcile their differences on itemized deductions as tax writers seek the revenue needed to abide by budget reconciliation rules.