The House’s top taxwriter said November 28 that the Tax Cuts and Jobs Act (H.R. 1) will be subject to a conference committee, but some tax staffers and lobbyists suggested leaders in the two chambers are working on changes to expedite the bill’s passage.
There is plenty of common ground between the House and Senate bills, but there are several key differences that “can only be worked out in a conference,” House Ways and Means Committee Chair Kevin Brady, R-Texas, said during a weekly press briefing.
“I know they’re working to make improvements in the Senate. We’ll know more when they’re completed. . . . The chambers have taken different approaches in areas such as passthroughs, how the individual rate brackets and deduction issues” are handled, Brady said. “And we certainly have a lot of work with the Senate to do on the international side of this,” he said.
Appearing on CNBC’s Squawk on the Street, Brady said that the tax bill will “be improved at every step,” again mentioning a conference committee. And while Brady offered no specifics on what additional changes would be made, he suggested during the interview and at an event in Washington that changes to the tax treatment of passthrough businesses and student loan interest are up for discussion.
Speaking earlier in the day at an event hosted by the American Enterprise Institute, Brady suggested the “House has always been supportive” of repealing the Affordable Care Act’s individual mandate, which is included in the Senate version of H.R. 1. However, he stopped short of confirming that elimination of the mandate penalty would be part of the final legislation, saying the House will “let the Senate process play out.”
Despite Brady’s comments, some Capitol Hill staffers are unsure whether a conference committee would produce actual debate on the stark differences between the House and Senate products or follow a predetermined process.
A House GOP tax staffer told Tax Analysts that the committee staff “spent so much time yesterday telling us that we will be doing a conference committee, that more and more staff are convinced that we in fact will not be doing a committee, but rather taking an up-or-down vote on the Senate version. It will be deeply disappointing if that is the case.”
Republicans in both chambers may need to accept some concessions negotiated by leadership, a GOP tax lobbyist suggested. “Most lobbyists are working under the assumption that the ‘Big Six’ are working [on] a deal, and some changes will be made to the Senate bill. Then the House will make some changes and send it back. And that ping-pong will happen one or two times, and then this thing will be done,” the lobbyist said.
However, strict budget reconciliation rules in the Senate may obstruct some changes to the tax bill before it passes the upper chamber, which could force Republicans to make additional changes in a conference. What those modifications may be remains unclear, but one likely change would be to adopt the Senate’s anti-base-erosion measure, a second Republican tax lobbyist said.
Another House GOP aide also suggested the Senate’s approach regarding base erosion is favored over the House’s, but other issues, including the partial limitation of business interest deductibility, still need to be resolved. “I’m not hearing that there won’t be a conference from any of the relevant actors, but the lobbyists are certainly beating down my door about it,” the aide added. “Property taxes will be big, and figuring out the passthrough and international pieces will be huge.”
Senate Finance Committee member Benjamin L. Cardin, D-Md., said he expects that Democrats will be shunned from participating because the bill would be “pre-conferenced from the point of view of the Republicans . . . [who will] take their best shot on a Senate bill during reconciliation that they believe can pass the House, and try to get it passed in the Senate and the House, but not the conference.”
Cardin told reporters that Senate Republicans “have not used an open democratic process since the beginning. Reconciliation doesn’t lend itself to it. It was never going to be a real conference.” He added that Democrats never thought “they would go through the extra votes to go into a formal conference.”
Asha Glover contributed to this article.
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