The timetable for releasing a tax reform bill and a subsequent committee markup will be announced “almost immediately” after the House approves the Senate’s fiscal 2018 budget resolution, House Ways and Means Committee Chair Kevin Brady, R-Texas, said October 23. Meanwhile, two tax lobbyists are predicting that the public will get its first peek at the bill the week of October 30.
Brady told reporters that he believes the House is in a good position to pass the Senate budget resolution by the end of the week. “Once that budget is approved, we’ll announce the date of the markup for a tax reform bill to move forward, as well as prior to that the date for the text to be laid out as well,” he added.
The House Rules Committee is scheduled to meet October 24 to consider the Senate budget resolution, which passed the upper chamber October 19. It includes reconciliation instructions for tax reform allowing for $1.5 trillion in tax cuts. The House is expected to begin debate on the resolution October 25 and hold a vote on it October 26.
“It all pivots off the budget,” Brady said. “The day we know, the hour we know that that’s approved, we’ll make that announcement. But until that budget is approved . . . we can’t set the timetable.”
Brady also declined to speculate on how long after the bill text is released that a markup would occur. However, he did say he is having conversations with Ways and Means ranking minority member Richard E. Neal, D-Mass., and other committee Democrats to nail down a “markup approach and format.”
“We obviously want to make sure that the minority have plenty of time to offer amendments, to make that case and engage in a positive way on tax reform if that’s what they choose to do,” Brady said.
Also October 23, two tax lobbyists told Tax Analysts that Brady plans to release a draft tax reform bill the week of October 30, partially in response to pressure from House leadership to speed the process along. A House GOP aide confirmed to Tax Analysts that Ways and Means Republicans will meet both October 30 and 31 on tax reform.
One lobbyist laid out a timeline for House action that he said was relayed to House Republicans in an October 22 call that included President Trump. According to the lobbyist, who cited someone who listened in on the call, the draft bill will probably be released midweek the week of October 30, and Brady hopes to begin the committee markup the afternoon of November 6, continuing through the rest of the week as needed. The House is scheduled to be in recess November 10 for Veterans Day.
The full House would then vote on the tax reform bill the week of November 13, before a weeklong recess for Thanksgiving, the lobbyist said. “It goes without saying that this is an ambitious schedule, so there likely may be bumps along the way,” the lobbyist said, noting that it lined up with the conservative House Freedom Caucus’s offer to support the Senate budget measure in expectation of a tax bill vote by the Thanksgiving recess.
Office of Management and Budget Director Mick Mulvaney told Fox News Sunday on October 22 that the House could save as many as 10 or 12 legislative days if it adopts the Senate budget instead of forcing a budget conference committee process to iron out differences between the House and Senate proposals. Brady likewise said, at the Securities Industry and Financial Markets Association’s annual meeting in Washington later October 23, that if the House does approve the Senate budget October 26 as expected, that would accelerate the timetable for tax reform by two or three weeks.
The tax reform timeline in the Senate is less clear. Senate Finance Committee Chair Orrin G. Hatch, R-Utah, previously said that his committee would not be a “rubber stamp” on tax reform and that his objective is to produce a bill that can pass his committee and that has input from all Finance Committee members.
Fourth Bracket Status Unclear
There are many unanswered questions about what a tax reform bill would include, and Brady did not tip his hand when asked specifically about the possibility of an additional income tax bracket for high-income individuals. There has been “no decision yet on a top bracket and what that rate would be or where it would start” if lawmakers decide to implement one, he told reporters.
The tax reform framework that the GOP “Big Six” negotiators released in September specifies three individual income tax rates of 12 percent, 25 percent, and 35 percent. However, it left the prospect of creating a fourth, top bracket, up to the discretion of congressional taxwriting committees.
Trump said in an interview that aired October 22 that he does not want, and does not expect tax reform to include, that additional bracket.
The interview with Trump on Fox News’ Sunday Morning Futures was conducted October 20, the same day House Speaker Paul D. Ryan, R-Wis., said that the extra bracket will be included in tax reform and that Trump had lobbied hard for it. Trump is “the one who has been very insistent that we reintroduce” a top rate to avoid lowering taxes on high-income earners, “so that all that revenue goes to the middle-class tax cut,” Ryan said on CBS This Morning.
Trump agreed that he wants to safeguard middle-income taxpayers, but otherwise contradicted Ryan. “When Paul mentions maybe one more category — which I’d rather not have, it may not happen — but the only reason I would, [and] he’s very plain on what I said, is if for any reason I feel the middle class is not being properly taken care of,” Trump said.
Mulvaney also downplayed the possibility of the extra bracket, saying in his Fox interview that there has been some discussion of the idea, mostly on Capitol Hill, but that the White House is “agnostic” on the matter.
“That [fourth] bracket is not a priority for the White House. We’re not pushing it; we don’t necessarily even want it,” Mulvaney said, but he added that if Congress needs it to pass tax reform, the Trump administration will accept it.
Capping Retirement Plan Contributions?
Brady also told reporters he didn’t want to get ahead of his committee’s release of tax reform legislation regarding the treatment of retirement savings vehicles, but that Trump’s tweet on the topic would not affect the committee’s plans.
After reports late the week of October 16 that Republicans were considering a proposal to cap tax-deferred contributions to section 401(k) plans at $2,400 annually, Trump tweeted early October 23 that there would be no changes. “There will be NO change to your 401(k). This has always been a great and popular middle class tax break that works, and it stays!” he wrote.
Brady was asked about the tweet during an on-stage interview with CNBC’s Ylan Mui at the SIFMA meeting. House Republican taxwriters are “taking a fresh look at the savings plans, at savings vehicles,” Brady responded.
Brady said he expects the tax reform measure will contain “very strong incentives for more Americans” for earlier saving. “We think there is a role for tax-free retirement for those super savers. And we think it’s imperative we create more incentives for families to begin saving earlier in life than they do today,” he said.
In an October 23 letter to Brady and Neal, Rep. Raja Krishnamoorthi, D-Ill., urged them to reject the proposal to lower the cap for contributions to 401(k) plans. “This cap would place a crippling and unnecessary burden on working families in every Congressional district by making it harder for everyday Americans to save for their retirement,” he wrote.
SALT Deduction Negotiations
The status of the state and local tax deduction in tax reform has also been hotly contested. Brady said at the SIFMA meeting that House Republican taxwriters are working with lawmakers from high-tax states on potential changes to the deduction. “I want to make sure that Americans are better off after tax reform regardless of where they live,” Brady said, adding that’s true whether a taxpayer lives in a high- or low-tax state.
Caps on amounts and income levels that would qualify for the deduction “are in the discussions,” Brady said.
“And we’ll have one or two meetings this week to that regard laying out some solutions,” Brady said. “But more importantly they’ve been bringing us solutions on how we might tackle it. So we want to make sure we get to a good place with them.”
Follow Luca Gattoni-Celli (@TheGattoniCelli), Asha Glover (@AshaSGlover), and David van den Berg (@TAtaxDavidVDB) on Twitter for real-time updates.