President Set to Sign Tax BillDecember 20, 2017
In the early morning hours of Dec. 20, the Senate narrowly approved the most sweeping tax reform bill in decades, following the House’s initial approval on Dec. 19. The Tax Cuts and Jobs Act (H.R. 1) delivers deep and permanent tax cuts for corporations and lower rates for most American households until 2025. Due to a parliamentary hiccup, the House had to vote again on the measure the morning of Dec. 20 following a handful of minor changes to the version approved by the Senate. President Donald Trump is expected to sign the bill into law before the Christmas vacation.
The House bill originally passed 227:203 with 12 House Republicans voting against the tax bill, including 11 from the high-tax states of California, New Jersey and New York. They include: The full list of Republicans who voted against the bill: Dan Donovan (NY), John J. Faso (NY), Rodney Frelinghuysen (NJ), Darrell Issa (Calif.), Walter Jones (NC), Pete King (NY), Leonard Lance (NJ), Frank LoBiondo (NJ), Dana Rohrabacher (Calif.), Chris Smith (NJ), Elise Stefanik (NY) and Lee Zeldin (NY). In its latest vote, the measure passed the House 224-201.
The Senate bill passed 51:48 with all Republicans present voting yes–absent was Sen. John McCain (R-Ariz.) who is dealing with medical issues–and all Democrats voting no.
On Dec. 15, a House and Senate conference committee reached agreement on a final version of tax reform legislation, the conference report, that would lower business and individual tax rates, modernize U.S. international tax rules, and provide the most significant overhaul of the U.S. tax code in more than 30 years.
The House and Senate conference committee agreement features a number of notable changes to the House and Senate tax reform bills, including a decision to lower permanently the U.S. federal corporate income tax rate from 35 percent to 21 percent, instead of the 20-percent corporate rate that had been approved previously by each chamber.
The conference report will reduce the current 39.6-percent top individual income tax rate to 37 percent, lower than the top individual rates that had been approved separately by the House and Senate. Both the new corporate tax rate and revised individual tax rates will be effective for tax years beginning after Dec. 31, 2017. The new bill will repeal the corporate alternative minimum tax (AMT), while retaining a modified individual AMT with higher exemption amounts and phase-out thresholds.
The final package provides a revised 20 percent deduction for certain pass-through business income, and new rates for a repatriation ‘toll tax’ (15.5 percent for cash and cash equivalents and eight percent for illiquid assets) that are higher than the earlier House or Senate versions. The conference report makes numerous additional revisions to House and Senate tax reform proposals affecting businesses, international tax rules, and individuals. It also modifies or drops various revenue-raising provisions that had been proposed in the House or Senate bills to offset part of the cost of the proposed tax reforms.
One less-discussed aspect of the bill is the provision to eliminate the individual mandate portion of the Affordable Care Act in 2019.
To read NSBA’s letter of support for the Conference Report, please click here.