USA TODAY International Edition
House may balk at tax bill edits
Senate’s version differs from hard-liners’ hopes
Senate Republicans passed their tax bill early Saturday, so the next step will be a conference committee with the House to iron out differences with a bill that passed there Nov. 16.
Some of those differences are dollar amounts, with each chamber setting brackets and deductions differently. But there are also substantive differences that could face pushback from House members, particularly conservatives, and must be resolved before a bill could reach President Trump’s desk.
According to an internal poll of the conservative House Republican Study Committee obtained by USA TODAY, members were most concerned that the Senate bill sunsets individual tax cuts after 2025, delays the reduction in corporate rates until 2019 and continues to charge a tax on high-dollar estates.
The House could just pass the Senate bill and send it to Trump next week, but 97% of study committee members oppose that, and they’re not alone.
“We’re gonna go to conference unless the Senate makes unbelievable changes to their bill in the next few days,” Rep. Mark Meadows, R-N.C., who chairs the hard-line House Freedom Caucus, told reporters Thursday.
But Meadows said there didn’t seem to be irreconcilable differences: “I’m very optimistic. On a scale of one to 10, with 10 being the highest that tax reform gets done, I’m at a nine.”
He said he expected a bill on Trump’s desk by the end of the year.
But before that happens, here are some of the rough edges that must be smoothed out.
Corporate rate delay
One of the most significant sections of the bill is the massive tax cut for corporations. Both bills would take the top corporate tax rate from 35% to 20%. However, the Senate’s cut would happen in 2019 and the House’s next year.
Conservatives see no reason to delay what they believe will be an economic boom, and some worry about the impact on next year’s midterm elections.
“It would mean that the economy wouldn’t improve like it needs to, so we would lose the majority in the House and Senate, but the Democrats would take power just in time to take credit for the economy improving because of what the Senate did,” Rep. Louie Gohmert, a hard-line conservative from Texas, told reporters Thursday.
Elimination of the estate tax
Estates up to $5.5 million are currently exempt from taxes, but both the House and Senate bills would raise that number to $10 million, at least to start. However, the House bill would increase the exemption above $10 million each year after 2018 and eventually eliminate the estate tax after six years.
The Senate bill would leave the tax in place for estates over $10 million.
While the estate tax disproportionately affects a small number of high-income earners, it has become a priority of Trump’s. At a tax event in Missouri last week, Trump said it would be helpful for “loving families” to help their children.
“We want to make it easier for loving families to pass on their life’s work to their children. Be nice. Be very nice, right?” Trump said.
House conservatives are expected to demand elimination of what they call “the death tax” in its entirety.
Repeal of the individual mandate
The Senate includes a repeal of the Obamacare provision that calls for an IRS fine on people who do not purchase insurance. The House bill does not, but not necessarily because of pushback from members. Trump started pressing for it to be included in a tax bill after the House had already crafted its measure.
Senate Republicans then included the provision in their tax bill, and some moderates, like Sens. Susan Collins of Maine and Lisa Murkowski of Alaska, expressed concerns.
The Congressional Budget Office estimated that within 10 years, 13 million fewer people would have insurance, and those who buy it from governmentmanaged exchanges would see rates increase by 10% a year because the pool of patients would be sicker as healthier people opted not to buy coverage.
Collins and Murkowski were calmed by promises that Congress will advance separate bills to keep premiums down.
Because the House passed a repeal and replacement of Obamacare earlier this year eliminated the individual mandate, such a provision isn’t expected to get significant enough pushback to be removed. However, expect some moderate House Republicans to follow the example of Collins and Murkowski in calling for separate bills to stabilize the marketplace. And those bills will face pushback in the House, where conservatives believe any subsidies are a bailout to insurance companies.
Immigration
Sen. Jeff Flake of Arizona voted for the tax bill in part because he was promised he would be part of a Republican effort to prevent deportation of undocumented immigrants brought to the U.S. as children.
Flake did not say he was promised a bill to protect so-called DREAMers would be passed before the tax bill. But it is not clear the House would make passage of such a bill a priority at all.
Sunset on individual rates
Whereas the House bill made most of its changes permanent, the Senate bill imposes them only for five years, after which the current tax code would kick back in. That change, like the delay in the corporate reduction, was aimed at keeping the cost of the overall tax package from exceeding a $1.5 trillion limit set by the budget resolution adopted in October. It is something of a gimmick, as sponsors expect the tax cuts would be extended before they expire.
The so-called sunset provision was the No. 1 criticism of the Senate bill by the House Republican Study Committee members. But if the conference committee changes it, that could push the total cost of the bill over the $1.5 trillion limit.