12/16/2016

Senate to Use Reconciliation for Tax Reform

Republican leaders plan to use reconciliation to bypass standard Senate practices

Senate Republicans intend to pass tax reform legislation early next year through reconciliation, thereby bypassing the threat of any filibustering by Senate Democrats, according to Senate Majority Leader Mitch McConnell (R-KY). McConnell confirmed to reporters Dec. 12 that the Senate will pass two budget resolutions after President-Elect Trump is sworn in – one repealing Obamacare and the second to overhaul the tax code and cut rates for individuals and businesses.

“We anticipate doing two budget resolutions [next] year,” McConnell said. “The first will be the Obamacare repeal resolution, and then we will do one later in the spring which will largely be dedicated to tax reform. They will set up reconciliation follow-on vehicles to address two very important issues.”

Under reconciliation, the party that controls the Senate can pass legislation from a budget resolution with a simple majority instead of the 60 votes usually required. But legislation passed through this process must affect federal taxes, spending or deficits and must sunset after 10 years if it has any budgetary impact beyond a decade.

McConnell said tax reform should be revenue neutral, which is a view shared by House Ways and Means Committee Chairman Kevin Brady (R-TX). The House will take the lead on tax reform, and Brady already has a tax reform blueprint that calls for a 20 percent corporate tax rate, a 25 percent top rate for pass-throughs (small businesses taxed at individual rates) and a top individual rate of 33 percent.

Brady and other Ways and Means Republicans have been huddling this week to talk about specific proposals to include in a tax reform bill, which Brady said will be drafted before Trump’s inauguration on Jan. 20. Earlier this week, incoming White House Chief of Staff Reince Priebus said laid out an agenda for the first 100 days that tracks closely with congressional Republicans’ plans.

“We’re probably going to lead with Obamacare repeal and replace,” Priebus said. “Then, we’ll have a small tax reform package and then a bigger tax reform package at the end of April. It’s going to be a busy year with the first nine months being very much consumed with Obamacare and tax reform.”

Please click here to read the complete article from Associations Now.