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Financial Planning > Tax Planning > Tax Reform

The Real Fight Over Tax Overhaul Is Just Starting

By Melanie Waddell

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All eyes will now be on the Senate as the full House and the Senate Finance Committee passed their tax overhaul bills on Thursday.

Once the full Senate passes its bill, both versions of H.R. 1, the Tax Cuts and Jobs Act, will head to conference committee to be reconciled.

Senate Majority Leader Mitch McConnell, R-Ky., said the Senate would consider the Senate Finance Committee bill the week after Thanksgiving.

Greg Valliere, chief global strategist for Horizon Investments, said Friday that it may likely be winter before a bill gets done, as the “complicated issues, the estate tax, state and local taxes” still need to get ironed out between the two houses.

“I do think we’ll get a bill,” he said.

The headline for the markets after a bill passes: “a really dramatic cut in corporate tax rates, 35% to 22% or 23%; I’m not sure that President Donald Trump can get it down to 20%,” Valliere said.

“A lot of other provisions in the bill look quite positive for business,” he continued. “I think for individuals there will be some tax cuts, but I think there will be some watering down, and I think for the very rich, the tax bill might be a little less generous than perhaps people thought just a few months ago.”

The Tax Policy Center noted in its Friday blog post that it’s unlikely that the Senate will pass a bill with “as much as ease as the House version.”

Why? Sens. Ron Johnson, R-Wis., and Susan Collins, R-Maine, “remain unhappy,” with Sens. Bob Corker, John McCain and Lisa Murkowski having been “publicly silent.”

Senate Finance Ranking Member Ron Wyden, D-Ore., “predicts the bill will fail but Republicans remain confident they’ll round up the votes in the end,” the Tax Policy Center said.

The Tax Policy Center also points to a newly released poll that shows the majority of Americans still don’t like the GOP tax plan. 

The new Harvard-Harris poll found that 54% of respondents oppose the Republican tax reform bill, and 54% say the plan is more likely to hurt them financially than help them — but there’s a split along party lines.

Three out of four of Republicans say it will help them, while 77% of Democrats and 56% of independents say it will hurt them, according to the poll.

The American Retirement Association notes that neither the House nor Senate Finance Committee bills includes a provision to “Rothify” 401(k) plans, but each does contain a number of other retirement-related provisions, including changes that restrict IRA recharacterization and allow plan loan rollovers.

Senate Finance Committee Chairman Orrin Hatch, R-Utah — who shared some terse words with Sen. Sherrod Brown, D-Ohio, during the Thursday markup finale — released late on Tuesday a modified chairman’s mark that ARA says “contained mostly good news for retirement plans.”

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