30 October 2017 EY Center for Tax Policy: This Week in Tax Reform for October 27 Ways and Means bill release: The House Ways and Means Committee tax reform bill is slated to be released on November 1. House tax bill out November 1, markup starts November 6: House Ways and Means Committee Chairman Kevin Brady (R-TX) plans to release his tax reform bill on November 1 and a markup of the legislation will begin on November 6, Brady announced after the House adopted the Senate-passed FY 2018 budget resolution October 26. Both chambers agreeing to the same budget resolution authorizes the use of the budget reconciliation process that will allow a tax reform bill to pass the Senate by a simple majority vote (with the Vice President available to break a tie). Republicans hold 52 Senate seats, short of the 60-vote threshold necessary to overcome a filibuster. Reconciliation instructions under the resolution provide for a $1.5 trillion tax cut over 10 years, meaning tax cuts above that amount must be offset. Also, reconciliation rules preclude any title of the tax bill from adding to the deficit beyond the budget window. The Ways and Means bill is likely to demonstrate how members plan to lower rates and meet other goals of the tax reform framework within those fiscal restraints. Roll Call reported Chairman Brady as saying a static revenue score would be released at the outset of the markup but a dynamic score wouldn't be released until it concludes, and that he is aiming for the markup to be conducted during normal working hours — Ranking Member Richard Neal (D-MA) requested this — and finished that week. During an October 24 RealClearPolitics event, Brady said the Committee, following the release of a bill, will "continue to look to improve it at every step of the way," responding to feedback from businesses and individuals. Thanksgiving target in the Senate: Speaker Paul Ryan (R-WI) has repeatedly said he wants the House to approve the tax reform bill by Thanksgiving. That is also now the goal of the Senate, according to members of the Senate Finance Committee — John Cornyn (R-TX), who is the second-ranking Senate Republican, Tim Scott (R-SC), and Dean Heller (R-NV). "We need to get the tax bill out of the Senate before Thanksgiving," Cornyn said in the context of reports that Majority Leader Mitch McConnell (R-KY) may keep the chamber in session the weekend prior to, and week of, the holiday, The Hill reported October 26. When the Senate Finance Committee will release a proposal is currently unclear, though Cornyn said the Senate would be about a week behind the House, according to the Wall Street Journal. Scott told "CBS This Morning" that current deductions, including some "sacred cows," will be evaluated and, "The good news is we're looking at getting this done by Thanksgiving so folks will have a great opportunity to understand what it is we're doing for them by the time we get to the holidays." During an October 25 tax event, Heller said, "We have a lot of work to do between now and Thanksgiving — a lot of work to get through both houses by the time Thanksgiving comes around." State and local tax deduction: TheHouse adopted the Senate budget resolution by a 216-212 vote, with 20 Republicans voting no. Concerns over the proposed elimination of the state and local tax deduction were not enough to derail the budget, but a dozen GOP "no" votes were from Republican members representing New York, New Jersey, and Pennsylvania, which could be significantly affected by the proposal. Chairman Brady said he is working with members from those states to address concerns, and Tax Notes reported that "Brady said he is looking at specific districts and may write tax proposals that recognize the individual circumstances of those areas." Rep. Dan Donovan (R-NY), who voted against the budget, said October 27 a focus in meetings is on other ways to make up the revenue lost if the proposed elimination of the deduction is dropped or limited. Retirement savings: It was a week of mixed messages about whether Republican tax reform plans will include "Rothification" of retirement accounts, meaning imposing a cap on some portion of pre-tax contributions to defined contribution plan accounts. Chairman Brady said October 24 that House Republican tax-writers want Americans to "save more and save earlier" and that goal can be aided by tax reform, appearing to contradict President Trump's October 23 tweet promising no changes to 401(k) accounts: "This has always been a great and popular middle class tax break that works, and it stays!" Speaking to reporters October 25, President Trump said 401(k) accounts are very important and he wanted to put an end to proposed changes before they advanced very far. "I think Kevin Brady is fantastic, but he knows how important 401(k)'s are," the President said. Brady met with Trump on the issue October 25 and said the tax reform bill could propose increasing retirement account contribution limits but, according to press reports, also hinted that a portion would have to be after-tax. Hatch's view: In response to the President's comments on potential retirement account changes, Senate Finance Committee Chairman Orrin Hatch (R-UT) asserted that lawmakers would make their own determinations and "there are some things he shouldn't be shooting down," the Wall Street Journal reported October 23. "He can make his moves, but we're going to do things up here that might be a little bit different and that might be one where we have to say we disagree, but we'll see." On October 25, Hatch said he is nonetheless open to changes in retirement savings and other areas if they are sensible and, in crafting his bill, doesn't feel pressure to accede to demands from the White House. On the state and local tax deduction issue, Chairman Brady said he expects Hatch to honor whatever resolution is reached in the House. Democratic perspectives: Also October 25, President Trump said he thinks there will be Democratic support for the tax bill and that there are certain Democrats who, if they don't vote for tax cuts for businesses and individuals, will lose their races in 2018. Senate Democratic Leader Chuck Schumer (D-NY) said October 24 that there is a path forward for bipartisanship on the issue but only after the current effort fails. He later said Democrats "want to sit down with Republicans and come up with a deficit-neutral, middle-class, small-business-oriented, bipartisan tax relief bill — not a plan to benefit the richest 1% or the largest and most powerful corporations who are already flush with cash." Ways and Means Ranking Member Neal October 25 laid out principles for tax reform that include relief for the middle class. Child tax credit: Senator Marco Rubio (R-FL) called for the Child Tax Credit to be increased to $2,000, during an October 25 event with Senators Scott and Heller. Ivanka Trump also participated in the event and focused her comments on the high cost of child care. The September 27 "unified" framework included an unspecified increase in the Child Tax Credit. Kautter to be Acting IRS Commissioner: The White House October 26 announced President Trump's intention to designate Assistant Secretary for Tax Policy David Kautter as Acting Commissioner of the IRS. Current IRS Commissioner John Koskinen's term expires on November 12, and Kautter's designation as Acting Commissioner will take effect at that time, the Treasury Department said. A Treasury release said Kautter, a former Director of National Tax at EY, "will continue to carry out his Assistant Secretary duties, including working on tax reform, while serving as Acting Commissioner." "If there's anything all Republicans think is important to the country and to our party, it's comprehensive tax reform. The issue itself brings about great unity among our members, and so we're concentrating on the agenda that we have for the American people. The President shares that agenda. He's going to do a good job, I think, promoting that agenda, and we intend to achieve what we set out to achieve before the end of the year." — Senate Majority Leader Mitch McConnell (R-KY), October 24
Document ID: 2017-1790 | |||||
