United States

Revenue estimates reveal key differences between House and Senate

TAX ALERT  | 

The House and Senate tax plans are full of complex rules, arcane exceptions, and cross-references that are sometimes difficult to understand. But the official revenue estimates provide an easier way to get a sense of the significant differences between the bills. 

Here are some of the main items.

Corporate and pass-through rate provisions

The House bill cuts the corporate rate at a cost of $1.4 trillion. The Senate bill’s corporate cuts cost only $1.3 trillion because they start a year later.

The House bill cuts pass-through business tax rates at a cost of $600 billion. The Senate pass-through tax reductions cost only $362 billion. 

The Senate also takes away $137 billion from the pass-through sector with a new limitation on active losses, for a net boost to the pass-through sector of $225 billion – compared to $1.3 trillion of rate cuts for corporations.  

The House ratio of corporate rate benefits to pass-through rate benefits is 2.5/1. In the Senate it is 4/1 – or 6/1 if you include the cut-backs to active pass-through losses.

SALT and home mortgage provisions

The House bill denies state and local tax deductions for individuals, except for $10,000 of real property taxes, and also curbs interest deductions for future mortgages over $500,000. Along with a few other deduction limitations, it raises $1.3 trillion.

The Senate bill eliminates all state and local tax deductions, but keeps the mortgage interest rules as is, except for curbing deductions for home equity loans. Along with a few other deduction limitations it raises $977 billion.

Estate, gift, and GST provisions

The House bill doubles the current exemption amounts, and also repeals the estate and GST taxes after 2024 at a cost of $150 billion.

The Senate bill doubles the exemptions, but does not repeal estate or GST taxes and costs only $83 billion.

Business interest limitations

The House bill’s limitation on business interest deductions raise $172 billion.

The Senate’s limitations raise $308 billion.

International provisions

The House bill’s international provisions raise $279 billion. The Senate bill’s international provisions raise $154 billion. 

The main difference appears to be the repatriation taxes, which raise $294 billion in the House bill, but only $184 billion in the Senate bill.

The Joint Committee on Taxation House bill estimate can be found here and the Senate estimate can be found here.

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