It’s crunch time for Republican tax-writers on Thursday. The House Ways and Means Committee enters its final day of hammering out its tax-cut legislation, while a Senate panel plans to reveal its own version. Here are the latest developments, updated throughout the day:
Tax-Writers in Both Chambers to Release New Details
The Republican chairmen of Congress’s tax-writing committees were tight-lipped on Wednesday evening as House members rushed to find ways to reduce the almost $1.6 trillion cost of their tax bill and senators contemplated major departures from the House’s vision.
One example: Senators are considering keeping seven individual income-tax rates -- though the income thresholds that would apply to them aren’t clear. The House bill proposes condensing the marginal rates to just four.
Both chambers are scrambling to meet the same goal -- design legislation that doesn’t exceed the $1.5 trillion limit set by the fiscal 2018 budget resolution while providing deep rate cuts for businesses and individuals. But how they get there may be radically different.
Points of contention between the two chambers may include the number of individual income tax rates, the estate tax, treatment of state and local tax deductions, limits on mortgage interest deduction, guardrails for pass-through entities and international tax provisions.
And two potential options for raising some offsetting revenue -- delaying a 20 percent corporate rate or repealing the Obamacare individual mandate -- come with political risks.
Slashing the corporate rate to 20 percent from 35 percent is one of the costliest measures in the House tax bill -- but it’s probably the one that Republicans need the most to sustain their vision of spurring faster economic growth. Phasing it in, as some lawmakers are said to have discussed, would likely delay that growth.
Repealing the Obamacare requirement that individuals buy insurance would save $338 billion over 10 years, according to the latest Congressional Budget Office estimate, but it would also mean that 13 million fewer Americans would have health insurance by 2027.
That potential trade-off -- sacrificing health care for millions in the name of tax-rate cuts -- risks losing support. Republican senators voted down a measure that would have repealed the so-called individual mandate last summer.
“We’re driving towards that $1.5 trillion,” House Ways and Means Chairman Kevin Brady said after his committee had adjourned for the night. “Our whole goal obviously is to make sure this tax plan meets those budget instructions.”
Brady is expected to release a revised version of the House bill Thursday morning. It could be a “substantively and materially different tax bill,” and include changes to the 20 percent excise tax on foreign earnings, and tax credits for adoptions and catastrophes, among others, according to analyst Henrietta Treyz, director of economic policy and a managing partner at Veda Partners.
Debate will continue before the bill’s expected approval by committee on Thursday. Brady has said that once it reaches the full House for a vote -- perhaps as soon as next week -- the legislation won’t be open to amendment.
While the House winds down its markup procedure, the Senate Finance Committee is just getting started. Brady’s counterpart, Orrin Hatch, plans to release what an aide called a “conceptual mark” to the GOP conference late Thursday morning. It won’t be an actual legislative text.
Instead, the Senate’s plans for overhauling the tax code will be released, examined and debated as a narrative, said Julia Lawless, a committee spokeswoman -- allowing for what she termed a more “fulsome and engaged discussion.”
Senate Finance members will still be able to file and offer amendments to the proposal during the markup, but won’t require bill text. Once the markup is completed, the committee will put out full bill text along with an updated estimate of its overall cost.
That format could make it difficult to drill down and evaluate specific proposals and compare them to House provisions.
Hatch declined to provide specifics when asked about the number of individual income tax rates, or the effective start date of a 20 percent corporate rate. On the individual mandate question, he said: “We’ll have to see. I’m chairman and I have to deal with all kinds of ideas and all kinds of people and all kinds of feelings. So I don’t want to talk about what I’m for right now.”
“I’m not sure what we’re releasing tomorrow,” Hatch said. Still, when asked if it would undermine the House GOP efforts he said: “I don’t think it will.” -- Anna Edgerton, Laura Litvan and Colleen Murphy (Bloomberg BNA)
What to Watch on Thursday:
Here’s What Happened on Wednesday:
— With assistance by Alexis Leondis.
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