by Countable | 11.17.17
On a party-line 14-12 vote late Thursday night, the Senate Finance Committee approved the GOP tax reform bill after four days of contentious markup hearings. The bill is expected to be the subject of a vote and debate on the Senate floor when lawmakers return from recess the week after Thanksgiving, at which point it could undergo further changes.
Earlier on Thursday, the House passed its version of the Tax Cuts and Jobs Act, which has some key differences from the legislation the Senate Finance Committee is sending to the floor in the upper chamber. Here’s a look at some of the key distinctions and similarities:
Seven individual income tax brackets would remain rather than the House bill's four brackets. The Senate bill would set brackets at 10%, 12% (cut from 15%), 22.5% (cut from 25%), 25% (cut from 28%), 32.5% (cut from 33%), 35%, and 38.5% (cut from 39.6%). These tax rates would remain in effect for 10 years, at which point they’d sunset and rates would return to their current levels.
The standard deduction would be increased to $12,000 for individuals and $24,000 for married couples filing jointly as in the House bill.
Corporate tax rates would be cut from 35 percent to 20 percent like the House bill, but it wouldn’t take effect until 2019 at which point the rates would remain at that level permanently.
The individual mandate to have health insurance coverage imposed by Obamacare would be repealed, reducing deficits by $338 billion over the 2018-2027 period through lower health insurance subsidy payments. The number of uninsured would be expected to rise by 4 million in 2019 and 13 million in 2027 according to the CBO.
The mortgage interest deduction would be capped at $1 million rather than $500,000 as in the House plan.
The deduction for state and local taxes would be eliminated entirely, unlike the House bill which preserved and capped the deduction for state and local property taxes while eliminating the income tax deduction.
The child tax credit would be increased from $1,000 to $2,000 rather than the $1,600 in the House bill. It wouldn’t be indexed to inflation.
The estate tax’s exemption threshold would be doubled to $10 million like in the House bill, but the estate tax (aka the death tax) wouldn’t be repealed entirely after six years. The gift and generation-skipping transfer tax exemptions would also be doubled, and like the doubling of the estate tax, sunset in 2025 with the restoration current tax policy.
The pass-through tax rate for personal services corporations wouldn’t be reduced.
Makers of beer, wine, and liquor would get two years of of temporary tax relief.
When the bill comes to the Senate floor it will be under reconciliation rules that allow it to pass with a simple majority rather than the usual 60 vote threshold. But it’s not clear at the moment whether Republicans have the votes to pass it.
With 52 senators, the GOP can only afford to have two members oppose the bill and still pass it thanks to a tie-breaking vote from Vice President Mike Pence, meaning the spotlight will be on a handful of Republican senators with concerns about the bill. Here’s a look at what they’re saying:
Sen. John McCain (R-AZ) who cast the vote that doomed the GOP’s push to repeal Obamacare over the summer because of a failure to follow "regular order" and hold hearings, spoke highly of the process this time around. McCain praised the Finance Committee for holding four days of hearings on the measure and hopes that continues when the Senate returns “with both sides of the aisle having sufficient opportunity to debate the merits of tax reform and offer amendments.”
Sens. Lisa Murkowski (R-AK) and Susan Collins (R-ME) have expressed concern about the inclusion of the individual mandate repeal and its impact on health insurance markets, with Collins saying that it "greatly complicates our efforts." Murkowski said Thursday that passing a bipartisan health insurance stabilization plan is the key to her support.
Sen. Ron Johnson (R-WI) on Wednesday became the first (and so far the only) Republican senator to publicly say they’d vote against the bill. Johnson said it unfairly prioritized tax relief for corporations over "pass-through" entities that many small businesses are, like sole proprietorships, limited liability companies (LLCs), and S corporations.
Sens. Bob Corker (R-TN) and Jeff Flake (R-AZ) both expressed concerns about the bill’s impact on the deficit (projected to be $1.4 trillion per the Joint Committee on Taxation). Sen. Rob Portman (R-OH) joined them in expressing a preference for making portions of the bill permanent.
Should the Senate proceed with the current version of the tax bill? Does it need further amendment on the Senate floor? Should it be stopped altogether? Hit the Take Action button to tell your senators, then share your thoughts in the comments below!
— Eric Revell
What’s in the Senate GOP Tax Plan (Original Version)
(Photo Credit: malerapaso / iStock)
Written by Countable