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Budget Approvals Move Congress Closer to Tax Reform Goals

Posted on October 6, 2017 by David van den Berg, Dylan F. Moroses

Congressional Republicans’ tax reform plans are nearer fruition with the House’s passage of a fiscal 2018 budget resolution the same day the Senate Budget Committee approved its own version. 

The House voted 219-206 to pass its budget resolution October 5, with 18 Republicans siding with Democrats, all of whom opposed the budget. The resolution includes reconciliation instructions to produce deficit-neutral tax reform legislation along with more than $200 billion in mandatory spending reductions.

Several House GOP taxwriters praised the chamber for passing the resolution, highlighting its importance to passing tax reform legislation. House Ways and Means member Patrick Meehan, R-Pa., was the only Republican on the committee to oppose the resolution and issued no statement following the vote.

“Today, the House passed one of the most significant budgets many of us will ever vote on — a budget that paves the way for once-in-a-generation, transformational tax reform. . . . We are closer than ever to finishing what we have started for the American people,” House Ways and Means Chair Kevin Brady, R-Texas, said in a statement. “More jobs, fairer taxes, and bigger paychecks are on the horizon.”

House Budget Committee Chair Diane Black, R-Tenn., issued a release following the vote, labeling it a step that “unlocks pro-growth tax reform.”

Despite apparent differences in the scope of the House and Senate budget resolutions, House Ways and Means Committee member Kenny Marchant, R-Texas, suggested to Tax Analysts that most Republicans will support whatever compromise comes about during conference.

Democrats viewed the budget document as a giveaway to the wealthy.

“By voting for this shockingly extreme budget proposal, House Republicans have said loud and clear that they care more about giving giant tax breaks to the wealthy and big corporations than supporting our families or growing our economy,” House Budget Committee ranking minority member John A. Yarmuth, D-Ky., said in a release. “This budget makes deep cuts to Medicare, Medicaid, and nearly every investment in our future, all so millionaires can walk away with a $230,000 tax cut. I can’t justify that — and I have no idea how my Republican colleagues do.”

President Trump welcomed the House passage. 

“This resolution is a key step towards Making America Great Again by supporting the Administration’s legislative agenda, as it, among other things, drives economic growth and job creation, creates a pathway to fix our rigged and burdensome tax code and establishes a framework for rebuilding our military and securing the border,” he said in a statement.

Later that same day, the Senate Budget Committee voted 12-11 on party lines to approve the upper chamber’s budget resolution.

“This budget is a step towards a brighter future,” Senate Budget Committee Chair Michael B. Enzi, R-Wyo., said after the vote. “It reflects the belief that many of us share that by allowing American families and small businesses to keep more of their hard-earned dollars, they will innovate and invest that money in ways that will grow our economy.”

Sen. Bernie Sanders, I-Vt., the committee’s ranking minority member, blasted the resolution “as one of the most cruel, destructive budgets in the modern history of this country.” 

Sanders argued that it gives tax breaks to the wealthy while cutting funding to Medicare and Medicaid, education, and child care.

Sen. Patrick J. Toomey, R-Pa., who serves on both the Budget and Finance committees, responded by saying “it is not knowable by anyone alive exactly how the tax reform that eventually follows from this legislation will affect various individuals because it hasn’t been written yet.”

The committee considered 29 amendments to the resolution and passed eight of them. Democrats introduced five of those amendments. Sen. Tim Kaine, D-Va., sponsored an approved amendment to prohibit cuts to Medicare, Medicaid, or Social Security to fund tax cuts and to change the resolution to call for revenue-neutral, rather than deficit-neutral, cuts. Sen. Bob Corker, R-Tenn., was the lone Republican to vote for the amendment.

Toomey said before the amendment passed that it is unnecessary and that it could have harmful unintended consequences.

“I think, for technical reasons, switching the revenue and deficit terminology could preclude the possibility of increasing refundable child tax credits, which might very well be a feature that we would want to consider in the tax reform,” he said.

Sen. Angus S. King Jr., I-Maine, sponsored an amendment to require the Congressional Budget Office and Joint Committee on Taxation to include distributional estimates across income categories resulting from major legislation, to the extent practicable. The committee approved the amendment.

The committee also approved an amendment introduced by Sen. John Kennedy, R-La., which says tax legislation may include tax relief for middle-income Americans, lower taxes on families, or incentives to companies to invest and create jobs domestically.

The Senate is scheduled to be on recess the week of October 9.

Follow Dylan F. Moroses (@DMoroses3244) and David van den Berg (@TAtaxDavidVDB) on Twitter for real-time updates.