While discussions about Affordable Health Care fade after the Senate failed to pass a repeal and replace bill last week, discussions about tax reform are beginning to heat up. The National Association of Enrolled Agents (NAEA) provided the following update this morning.
It is important to keep in mind that to avoid 60 votes in the Senate, congressional Republicans have chosen a budget process known as "reconciliation" for both ACA repeal and tax reform. Reconciliation was originally intended as a limited mechanism to force Congress to lower the deficits. Both parties have used it, however, for other purposes in recent past: The Bush tax cuts and part of the Affordable Care Act being the most prominent examples.
To use reconciliation, the House and the Senate must pass a joint resolution laying out a budget blueprint with so-called reconciliation instructions. The House Budget Committee has reported out such a resolution for FY 2018. The conservative Republican Study Committee, a bloc of 150 ultra-conservative House members, has indicated that they may not support the committee reported resolution unless it calls for deep cuts in entitlements and domestic spending. Therefore, Speaker Ryan has delayed floor consideration until September. Even if House leadership agrees with the demands of the Republican Study Committee, it is highly unlikely that the Senate would go along with their agenda. In short, no resolution means no reconciliation, resulting in no vehicle for tax reform.
Republican leadership intended to use the savings from repealing the ACA to help pay for tax reform. Additionally, the leadership in the Senate, House and Department of Treasury have indicated that they have abandoned the border adjustability proposal for tax reform, leaving a large trillion-dollar revenue hole in a potential bill. It is unclear if tax writers would have enough political will power to repeal current deductions and credits to the extent necessary to cover such a large shortfall.
Turner's Tax Service will continue to keep you updated as tax reform begins to move through the legislative process.
It is important to keep in mind that to avoid 60 votes in the Senate, congressional Republicans have chosen a budget process known as "reconciliation" for both ACA repeal and tax reform. Reconciliation was originally intended as a limited mechanism to force Congress to lower the deficits. Both parties have used it, however, for other purposes in recent past: The Bush tax cuts and part of the Affordable Care Act being the most prominent examples.
To use reconciliation, the House and the Senate must pass a joint resolution laying out a budget blueprint with so-called reconciliation instructions. The House Budget Committee has reported out such a resolution for FY 2018. The conservative Republican Study Committee, a bloc of 150 ultra-conservative House members, has indicated that they may not support the committee reported resolution unless it calls for deep cuts in entitlements and domestic spending. Therefore, Speaker Ryan has delayed floor consideration until September. Even if House leadership agrees with the demands of the Republican Study Committee, it is highly unlikely that the Senate would go along with their agenda. In short, no resolution means no reconciliation, resulting in no vehicle for tax reform.
Republican leadership intended to use the savings from repealing the ACA to help pay for tax reform. Additionally, the leadership in the Senate, House and Department of Treasury have indicated that they have abandoned the border adjustability proposal for tax reform, leaving a large trillion-dollar revenue hole in a potential bill. It is unclear if tax writers would have enough political will power to repeal current deductions and credits to the extent necessary to cover such a large shortfall.
Turner's Tax Service will continue to keep you updated as tax reform begins to move through the legislative process.
RSS Feed