NEW YORK – Congressional leaders worked quickly to finalize compromise legislation for floor votes next week in an all-out effort to provide themselves and President Donald Trump with a major policy victory before the end of 2017. Here are the latest developments, updated throughout the day:
Changes Seen Costing $200 Billion in Revenue (12:25 p.m.)
Tentative details that have emerged on a consensus tax plan would wipe out more than $200 billion in revenue over 10 years – leaving lawmakers to find additional ways to make up the cost, according to one independent analyst’s calculations.
As a consequence, lawmakers may look to set new time limits on the individual tax cuts they intend to offer, wrote Henrietta Treyz, the director of economic policy for Veda Partners LLC, an investment adviser and consulting group.
Another analyst, Isaac Boltansky of Compass Point Research & Trading LLC, also wrote in a note that earlier sunsets on the individual tax cuts represents one option for lawmakers. Both analysts said lawmakers might also set higher-than-planned tax rates on an estimated $3.1 trillion in foreign earnings that United States companies have stockpiled offshore.
The Senate bill would already wipe its individual tax cuts off the books beginning in 2026 to help meet budget constraints. GOP lawmakers have stressed that they believe the tax cuts would continue – but that would be up to a future Congress to decide.
House and Senate lawmakers are putting the finishing touches on a compromise measure that they hope to send to Trump next week. Tentative changes would include cutting the top individual rate and expanding an individual deduction for state and local taxes – measures that could easily cost $200 billion to $300 billion over a decade, Treyz wrote.
Lawmakers have also agreed to set a higher corporate tax rate than originally planned, taking the current 35 percent rate to 21 percent instead of 20. That change would generate roughly $100 billion over 10 years, Treyz estimated. But another change – beginning that new rate in 2018 instead of 2019, as the Senate bill would have done – will more than consume that revenue savings, she said.
It remains unclear how lawmakers will cover the cost. Under the 2018 budget they approved, the tax bill cannot result in more than $1.5 trillion of deficits over the next decade. The version that the Senate passed on Dec. 2 has been estimated by Congress’s Joint Committee on Taxation as reducing revenue by $1.45 trillion over that period.
Senator John Thune, the chamber’s third-ranking Republican, said that officials had many of their plans scored Wednesday night – but those results haven’t been made public.
Lynnley Browning is a reporter for Bloomberg News.
Brady Says State Sales Tax Break Part of Deal (11:05 a.m.)
House Ways and Means Chairman Kevin Brady, who’s overseeing the House-Senate conference committee of tax negotiators, said Thursday that taxpayers will be able to deduct state income taxes or state sales taxes in addition to property levies – up to a $10,000 cap.
The versions of the bills approved by the House and Senate preserved only the individual deduction for state and local property taxes – capped at $10,000 – but not for income or sales taxes.
Meanwhile, GOP lawmakers began to reveal their tentative plans for approving the legislation next week.
House Republicans have been told that the Senate will vote first on the legislation — perhaps on Monday or Tuesday, said GOP Representative Tom Cole of Oklahoma. Then the House would vote on Tuesday or Wednesday, Cole said.
Before that, Brady said, members of the House-Senate conference committee will have a two-hour window to sign a report on their official agreement on Friday morning. He said he doesn’t know yet when text of that agreement would be released.
But Senator John Thune, the chamber’s third-ranking Republican leader, said Thursday that he expects that an actual bill for the compromise measure will be made public on Friday.
Laura Davison and Erik Wasson are reporters for Bloomberg News.
Senate’s Thune Says Bill Text Likely by Friday (10:43 a.m.)
Republican lawmakers are trying to release the text of a compromise bill by Friday in order to hold votes in the House and Senate early next week, said Senator John Thune, the chamber’s third-ranking Republican.
Lawmakers last night had various changes to the legislation analyzed for their revenue effects, Thune said Thursday. “I would say it should be out there tomorrow, we need to have text out there tomorrow so we can vote on it Monday, Tuesday,” he said.
If they stick to that pace, legislation could be delivered for President Trump’s signature by mid-week next week.
Ari Natter is a reporter for Bloomberg News.
What to Watch on Thursday
More details of the final legislation may emerge as lawmakers float trial balloons, count votes and prepare to release their plans on Friday. The plan may be tweaked as lawmakers receive “scores” of various proposals that gauge how much revenue they’d produce or cost. One sticking point that remained Wednesday was whether to permanently double the threshold at which the estate tax applies – meaning that the levy would apply to fewer multimillion-dollar estates from now on. The Senate had earlier voted to double the exemption – currently about $11 million for a married couple – but only until 2026. Another centered on how quickly to phase out a provision that would allow companies to fully and immediately deduct the cost of their equipment purchases. More clarity may emerge on both measures Thursday.
Here’s What Happened on Wednesday
Federal Reserve Chair Janet Yellen downplayed the economic growth effect that would result from the tax overhaul. “It’s not a gigantic increase in growth,” she said during a news conference. Lawmakers haven’t finalized the rates that U.S. companies would pay on an estimated $3.1 trillion in earnings they’ve stockpiled overseas – and those rates may change depending on the final bill’s revenue score, said Representative Tom Reed, a Republican member of the tax-writing House Ways and Means Committee. Trump promised everyday Americans a “ giant tax cut for Christmas” during a speech that the White House billed as his closing argument for the tax legislation.