Frontpage : Republicans in Congress are currently engaged in a push to pass the most significant tax overhaul bill since the days of the Reagan administration and send the bill to the White House for President Trump’s signature by the end of this year. They are looking to simplify the current overly burdensome tax system and to reduce taxes by as much as $1.5 trillion over the next ten years, with relief focused on middle class taxpayers and on businesses.
In order to eliminate the possibility of a Democrat filibuster in the Senate, both congressional chambers have agreed on a budget blueprint that would permit them to pass the tax legislation with simple majorities under what is known as the Budget Reconciliation Process. That’s the good news. The problem is that before they reach the finish line, the Republicans need to reach consensus among themselves. Republicans are certainly aware of the high political stakes. They know they cannot afford to blow the chance that a major tax overhaul would provide to redeem themselves after their spectacular failure to repeal and replace Obamacare.
The tax bills currently working their way through the House of Representatives and Senate are rooted in broad principles both chambers and the White House agree upon, such as the need to cut business taxes to spur investment and create jobs at home, to simplify the tax system and to help the middle class. Yet, members of the Republican caucus are divided on how to pay for the tax cuts and on the amount of deficit increase they would be willing to tolerate.
The House Ways and Means Committee has approved the House version and sent the bill to the House floor for a vote as early as this week. The Senate bill, unveiled last Thursday, is currently before the Senate Finance Committee for markup. While directionally similar, the two bills differ on some significant details. Moreover, revisions may be needed to make sure that the final product complies with the requirements of the Budget Reconciliation Process, including rules against expansion of the budget deficits after the first decade.
Both bills would cut corporate taxes from 35 percent down to 20 percent. However, the House bill would make the corporate tax cut effective in 2018. The Senate bill would defer the cut until 2019. Repatriation of currently deferred foreign profits is encouraged in both bills by relatively low, but not identical, one-time taxes. read more