Conferees Named for Tax BillDecember 13, 2017
Last week, the House and Senate held separate votes to authorize the start of conference negotiations to reconcile their competing versions of the Tax Cuts and Jobs Act (H.R. 1). The H.R. 1 conference committee is comprised of a mix of Republicans and Democrats representing the congressional panels with jurisdiction over the legislation – namely, the Ways and Means, Budget, Natural Resources, and Energy and Commerce committees in the House, and the Finance, Budget, Energy and Natural Resources, and Health, Education, Labor, and Pensions (HELP) committees in the Senate.
Republican House members named to the conference committee include Ways and Means Committee Chairman Kevin Brady (who, is chairing the conference negotiations), along with Devin Nunes (Calif.), Peter Roskam (Ill.), Diane Black (Tenn.) (who also chairs the House Budget Committee), and Kristi Noem (S.D.); Natural Resources Committee Chairman Rob Bishop (Utah) and Natural Resources Committee member Don Young (Alaska), and Energy and Commerce Committee members Fred Upton (Mich.) and John Shimkus (Ill.).
House Democrats at the negotiating table include Ways and Means ranking member Richard Neal (Mass.) and Sander Levin (Mich.) and Lloyd Doggett (Texas), Raul Grijalva (Ariz.); and Energy and Commerce Committee member Kathy Castor (Fl.).
Republican conferees from the Senate include Finance Committee Chairman Orrin Hatch (Utah) and taxwriters Mike Enzi (Wyo.), John Cornyn (Texas), John Thune (S.D.), Rob Portman (Ohio), and Tim Scott (S.C.); and Energy and Natural Resources Committee Chairman Lisa Murkowski (Alaska). Hatch, Enzi, Murkowski, and Scott also serve on the Senate HELP Committee. Enzi also chairs the Senate Budget Committee.
They will be joined by Senate Finance Committee ranking Democrat Ron Wyden (Ore.) (who also sits on the Energy and Natural Resources Committee and the Budget Committee), Bernie Sanders (Vt.) (ranking member of the Budget Committee and member of the Energy and Natural Resources and HELP committees), Patty Murray (Wash.) (ranking member of the HELP Committee and member of the Budget Committee), Maria Cantwell (Wash.) (ranking member of the Energy and Natural Resources Committee and member of the Finance Committee), Debbie Stabenow (Mich.) (member of the Finance, Energy and Natural Resources, and Budget committees), Bob Menendez (N.J.) (member of the Finance Committee) and Tom Carper (Dela.) (member of the Finance Committee).
The conference committee is required to have at least one public meeting, which is scheduled for Wednesday, Dec. 13. The conference process allows for additional open meetings to discuss specific provisions but observers suggest that is unlikely to be the case for this legislation and that final details probably will be hashed out in a series of closed-door sessions. Once an agreement is reached, it will need to be submitted to the Joint Committee on Taxation (JCT) for a new revenue score and voted on in the House and Senate. Lawmakers currently hope that the process will be completed by December 22.
Both the House- and Senate-approved versions of H.R. 1 call for reducing the corporate rate to 20 percent from its current level of 35 percent, although the House provision would be effective beginning in 2018 while the Senate would delay enactment of the rate cut until 2019. However, President Trump recently mentioned the idea of a 22 percent rate in comments on December 3. For his part, Senate Majority Leader Mitch McConnell (R-Ky.), has said he would prefer for the proposed rate to remain at 20 percent to boost global competitiveness. House Ways and Means Chairman Kevin Brady has said that he is focused on 20 percent.
If negotiators were to incorporate a two-percentage point bump in the proposed corporate rate into the conference agreement, it would free up roughly $200 billion in revenue that would give Republican leaders wiggle room to make some modifications and still keep the 10-year cost of the final package within the parameters of the fiscal year 2018 congressional budget resolution – that is, a net tax cut of no more than $1.5 trillion – as well as budget reconciliation rules that prohibit the legislation from increasing federal deficits outside the 10-year budget window. According to estimates from the Joint Committee on Taxation (JCT), the House-passed legislation would reduce federal receipts by $1.44 trillion between 2018 and 2027 (JCX-54-17) while the Senate measure would spike the deficit by 1.45 trillion over the same period (JCX-63-17).
One notable difference between the two bills is the way they treat income earned by pass-through entities. The House sets a top marginal rate at 25 percent on qualifying pass-through business profits, with an assumed 70/30 split between wages and business profits, while the Senate measure proposes a 23 percent deduction for business profits, limited to 50 percent of W-2 wages. Both would have certain exemptions for small businesses.
Please click here to read NSBA’s comment letter to Conferees.
A detailed report outlining similarities and differences between the two bills is available from the JCT.