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Here's The Latest On The GOP Tax Bill As The Senate Starts Debate

Much like the Obamacare repeal and replace effort earlier this year, the past couple of weeks have been an invariable roller coaster ride for GOP representatives as Congressional leaders have tried to form some level of consensus within a fractured party with competing interests.   This week will undoubtedly be no different.

In light of that, we've taken a look at some of the key differences between the Senate and House tax bills as they currently stand.  As of now the biggest difference is the treatment of the State and Local Tax (SALT) deduction.  While the Senate has called for a full repeal of the SALT deduction, House members have drawn a hard line, even though almost all political "hard lines" become flexible under the right circumstances, demanding at least $10,000 worth of property tax deductions be allowed.  Per Bloomberg:

The House and Senate are on a collision course over one of the most prized individual breaks in the tax code.

 

The Senate Finance Committee will start debating late Monday afternoon the 247-page tax proposal released last week by Chairman Orrin Hatch. As of now, the “conceptual” mark has some significant differences with the tax bill the House Ways and Means Committee approved last week -- chief among them the Senate’s call for repealing the state and local tax deduction entirely.

 

Ways and Means Chairman Kevin Brady took a hard-line approach during a “Fox News Sunday” interview, saying the House won’t accept a tax bill that eliminates the deduction entirely. The House bill retains the deduction for property taxes up to $10,000.

 

House Speaker Paul Ryan has promised that the differences will be settled in a conference between the two chambers, but some House lawmakers are concerned they’ll just be forced into a take-it-or-leave-it vote for a bill that looks much closer to the Senate version.

 

“There are going to be things that we absolutely object to” in the bill that comes out of conference, said Scott Perry, a Pennsylvania Republican and member of the conservative Freedom Caucus. “But we’re going to have to look at it in its totality and say, ‘Yeah I don’t like it,’ but you have a binary choice” to vote for or against the tax bill, Perry said.

Other divisive issues between the House and Senate could include the top individual income tax rate, the estate tax, the effective start date of a corporate rate and levies for companies that bring offshore profits back to the U.S.

Of course, in the end, a final bill is more likely to resemble the Senate proposal simply because that chamber has a slim majority and can only afford to lose two votes. The House has a wider majority and can afford up to 22 defections.

Meanwhile, another complicating factor is that the tax plans are each proceeding on parallel tracks with the Senate beginning debate on their version of a tax bill before the House has even passed their version.

House GOP members may not want to take a politically painful vote when the bill is on the House floor if Senate tax writers have taken some provisions off the table.

 

Still, House Majority Leader Kevin McCarthy says the two-track approach is needed to get a bill completed before 2018.

 

“The Senate’s near simultaneous action shows how seriously this Congress is to get tax reform done this year,” McCarthy said in an emailed statement. He confirmed that the House plans to vote on the tax bill this week.

With that, here are a couple more things to watch this week courtesy of Bloomberg:

  • The Senate Finance Committee will begin debating the tax bill at 3 p.m. Monday, in a markup that is expected to stretch out for several days and could feature votes on numerous amendments.

 

  • Potential amendment related to the tax treatment of carried interest. The break for investment managers is likely to change in the Senate, even though the chamber’s current tax proposal doesn’t call for it, according to Pat Toomey of Pennsylvania and Chuck Grassley of Iowa.

 

  • On the House side, Majority Whip Steve Scalise said that GOP leaders would work to win over rank-and-file Republicans Monday evening. More changes to the House bill could still come before the planned floor vote this week. If GOP leaders need to make last-minute changes to guarantee enough Republican “yes” votes, they could stick in a manager’s amendment in the Rules Committee, which is scheduled to consider the bill on Wednesday.

Of course, the most important consideration for this new week of tax debate is precisely where to set the over/under on how many times the tax bill will be declared officially dead by the mainstream media before being brought back to life with new amendments.