The Senate tax-writing committee is continuing to hammer out the details of its tax cut proposal today, while the House may vote on H.R. 1, its version of the Tax Cuts and Jobs Act bill, as soon as Thursday.
The House’s chief tax writer says he’s confident its tax bill will pass, but a major challenge continues to loom over Senate Republicans — the Byrd Rule, an arcane measure that says the final bill can’t add to the federal deficit after its first decade in place if lawmakers want to pass it with a simple majority.
The Senate Finance Committee is set to start debating the GOP tax proposal, which is estimated to cost $217 billion in the 10th year, with more red ink in subsequent years. That means there would have to be significant changes to avoid long-term deficits. Orrin Hatch, the panel’s chairman, acknowledged on Monday there’s still work to do. He’s expected to release a modified chairman’s mark on Tuesday that may aim for better numbers.
But how the revised version would bridge the gap remains a mystery.
Even Hatch seems unsure: “I know what’s in it but they may change it on me,” he said after his committee recessed Monday evening.
Sen. Susan Collins of Maine offered some ideas for changes late Monday. They included setting the corporate rate at 21%, not 20, and keeping the current top individual rate of 39.6% for married taxpayers filing jointly who earn $1 million or more. The Senate bill proposes cutting that rate to 38.5%. The proceeds from those adjustments could go to providing a refundable childcare tax credit or preserving property tax deductions, according to Collins, who cast a pivotal vote to block an Obamacare repeal bill earlier this year.
The Senate proposal would limit its revenue losses in part by delaying a cut to the corporate rate — to 20% from 35% — until 2019, a year later than the House has proposed. It would also fully repeal all state and local tax deductions. The House wants to retain a break for state and local property taxes, capped at $10,000.
Across the Capitol, House Republicans were upbeat Monday night. Matt Gaetz, a Florida Republican who previously criticized the secret drafting of the bill, praised the way House leaders had educated members about the legislation and said he expects it to pass this week.
“After the cataclysmic stumble on health care I think people really are looking for a way to get to yes on taxes,” Gaetz said in an interview.