House tax bill release delayed until November 2
House Republicans scramble to finalize legislation
TAX ALERT |
The House Ways and Means Committee has delayed, by one day, the release of its draft tax reform bill. The bill is now expected to be released on Thursday Nov. 2, 2017. The extra day, beyond the original scheduled release of Wednesday, Nov. 1, 2017, was apparently prompted by last minute disagreements – likely including the treatment of state and local tax deductions for individuals, the timing of corporate rate reductions, and the difficulty of getting enough votes for the package while staying with their overall budgetary constraints, as political concessions to Members concerned about particular provisions generally cost revenue that must be made up somewhere else.
The one-day delay is not very much, but it is emblematic of the difficulties of pushing through complex legislation under a tight set of deadlines. President Trump has set an aggressive overall timeline, seeking to sign final legislation by the Christmas holiday. Adding to the pressure, House Speaker Paul Ryan has promised to hold a vote on the House bill by Thanksgiving. House Committee Chairman Brady has stated that much progress has been made, but disagreements among his Members could not be entirely resolved in time to meet the November 1 deadline. Reportedly, one of the main hold-ups is whether to phase in or immediately reduce the corporate tax rate from 35 percent to 20 percent, and whether to make that change permanent or return to current rates after a decade – which might make it easier to pass the bill in the Senate under that body’s guidelines for “reconciliation” legislation. To pass with only a simple majority in the Senate it may be necessary to ensure that the bill does not increase the deficit in the “out-years” beyond 10 years. That is why tax cuts are often made temporary.
Another issue of reported concern in the final days is the income threshold for the top marginal rate – which may be as high as the current top rate of 39.6 percent. Some have suggested that the top rate should begin at taxable incomes of $1 million – not the present cutoff of approximately $470,700 for a joint return.
Complicating the prospects of final enactment in 2017 is the schedule of the Senate, where a number of different dates in November have been indicated as the time when the Senate Finance Committee might announce or act on its version of the legislation. After that, the full Senate would also have to vote, and any provisions that differ between the Senate-passed and House-passed versions would have to be reconciled – and put to another, final vote in both bodies.
If the House Republicans stick to their schedule, expect more details to be released tomorrow. Even that may not be the final House version as more details will likely lead to more complaints that may need to be addressed to get the votes needed for passage out of the Ways and Means Committee.