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Financial Planning > Tax Planning > Tax Deductions

Cornyn Says Senate to 'Start From Scratch': Tax Debate Update

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Even if House Republicans are able to keep their members in line this week and next, another threat to passage may be taking shape across the Capitol: Senate Republicans are gearing up to release their own tax bill, which is likely to have different provisions and create fresh points of contention.

Sen. John Cornyn of Texas, the No. 2 Republican leader, said in an interview Monday the chamber’s tax-writing committee wouldn’t be using the House bill as a starting point.

“We’re going to start from scratch, really. We wish them well and I think a lot of what they’ve tried to do is kind of instructive for us,” Cornyn said. “It’s helpful for us to have them go first to see the kind of issues that come up and anticipate those in the Finance Committee markup. But I’m still pretty optimistic we’ll get this done before Thanksgiving.”

(Related: 5 Republican Tax Bill Sections for Agents to Track

Senate Finance Chairman Orrin Hatch said he plans to release a tax bill for his committee to consider “once the House Ways and Means Committee completes its work, hopefully toward the end” of the week.

House Tax Chief Says Bill Hits Special Interests

House Ways and Means Chairman Kevin Brady told his panel it faces “a monumental challenge” this week: “coming together to fix a tax code that has become just as broken, complex and unfair as the one President Reagan and Congress overhauled in 1986.”

In his opening statement, Brady said the bill, which would cut tax rates for corporations and certain closely held businesses as well as for individuals, would spur economic growth. He said that by removing breaks for special interests, the bill would make the tax system fairer for all.

“This is liberation from high tax rates that punish hardworking Americans while Washington special interests get a pass,” Brady said. The bill would end a tax system that is “by special interests, of special interests and for special interests,” he said.

He added that although members had requests that weren’t ultimately included in the tax legislation, “I can assure you this is not the last tax markup our committee will ever hold.”

Rep. Richard Neal, the panel’s top Democrat, cited concerns over the bill’s proposals related to companies’ offshore profits, and changes to deductions for mortgage interest and medical expenses.

“The legislation, which was crafted solely by the majority party behind closed doors and which was not made public until late last week, puts the wealthy and well-connected first, while forcing millions of American families to watch as their taxes go up,” Neal said.

House Panel’s Speed on Tax Bill Irks Democrats

Democrats called for slowing down the House Ways and Means Committee’s consideration of its tax bill — saying lawmakers need to consider the legislation’s provisions for stemming tax avoidance.

“We gather at noon today,” said Rep. Lloyd Doggett, a Democrat on the Ways and Means panel. Yet there have been “less than 100 hours of evaluation of the bill,” he said.

On Sunday, an international journalism group published reports that alleged tax avoidance by U.S. multinational companies including Apple Inc. The reports, based on documents obtained from an offshore law firm, also linked high-ranking officials in President Donald Trump’s administration to holdings in offshore tax havens such as the Cayman Islands and Bermuda.

Democrats and tax-advocacy groups have called for delaying consideration of the tax bill pending more disclosures. On Monday, a pair of Democratic senators said the bill would do too little to stem aggressive tax avoidance.

“If you deduct medical expenses or student loan interest from your taxable income, the Republican plan comes after your wallet,” Democratic Sens. Chuck Schumer and Ron Wyden said in a joint statement. “But if you stash your billions in secret bank accounts overseas, their plan gives you the green light to keep doing what you’ve been doing.”

Schumer is the Senate minority leader. Wyden is the top Democrat on the tax-writing Senate Finance Committee.

—With assistance from Lynnley Browning and Sahil Kapur.

—Read Senators Nearing Bipartisan Deal to Stabilize ACA Markets on ThinkAdvisor.

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