House Ways and Means Committee Republicans unveiled a tax reform legislative draft November 2 that, among other things, calls for ambitious cuts to tax rates for corporations, passthrough entities, and individuals; a more generous expensing regime; significant increases to the individual standard deduction and the child tax credit; repeal of the estate tax and the individual alternative minimum tax; and a shift to a territorial system for taxing foreign-source income of U.S. multinationals.
The release had been set for November 1 but was delayed by one day as Ways and Means Chairman Kevin Brady, R-Texas, and his staff made last-minute modifications to the package to address certain issues raised by some Republican members of the panel.
The Ways and Means proposal – formally known as the Tax Cuts and Jobs Act (TCJA) – largely mirrors the objectives outlined in the unified tax reform framework released by the “Big Six” negotiating team of congressional Republican leaders and White House officials in September. Unlike the framework, however, the TCJA includes specific details on how the tax relief provisions would operate. Moreover, it lays out the policy tradeoffs that will be necessary to pay for the tax relief provisions – which according to unofficial estimates could cost several trillion dollars over 10 years – within the fiscal parameters of the recently approved unified budget resolution for fiscal year 2018 which affords budget reconciliation protections to a tax bill that increases the federal deficit by up to $1.5 trillion (net) over 10 years. (Reconciliation allows legislation that meets certain strict parliamentary and procedural rules to move through the House and Senate with simple majority votes, making it a powerful tool for Republicans who control 52 Senate seats, short of the three-fifths majority – that is, 60 votes – normally needed to advance legislation under regular order in that chamber.)
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