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Here is your daily round-up of news and analysis to keep you informed as tax reform works its way through Congress.
In the news
The Senate voted Wednesday to officially begin conference negotiations with House members over a tax code overhaul, as Republicans race to send a finished bill to President Donald Trump’s desk before Christmas.
The 51-47 party-line vote was largely a formality. Behind-the-scenes talks have already begun since the Senate passed its version early Saturday morning, following House passage of its own bill (HR 1) before Thanksgiving.
Central differences in the two proposals need to be resolved on individual tax brackets and rates, keeping or repealing the alternative minimum tax, the structure for taxing pass-through business income, the expiration of key tax breaks and more.
An arcane provision in the Senate tax bill could end up undermining the benefits of lower rates for businesses and households, according to tax experts.
The Senate's bill maintains the alternative minimum tax, a measure that has been widely criticized as complex and onerous by both sides of the aisle. It was kept in the bill during a dramatic series of last-minute negotiations to provide lawmakers with about $173 billion in revenue over a decade that would help offset costly deals. This helped to persuade reluctant Republicans to support the bill. But it also opened the door to a host of unintended consequences and a backlash from the business community.
"Retaining the AMT in reform is even more harmful than it is in its present form," Caroline Harris, chief tax counsel at the U.S. Chamber of Commerce, wrote in a blog post. "It eviscerates the impact of certain pro-growth policies."
Senate Majority Leader Mitch McConnell (R-Ky.) says he’s open to making a provision on state and local tax deductions more generous to win over House Republicans when the two chambers merge their tax bills in the coming weeks.
Some House Republicans, particularly from high-tax states such as California, want language that would allow taxpayers to deduct up to $10,000 of either their property or state and local income taxes. Both the Senate and House bills include the property tax provision, which was aimed at winning support from GOP lawmakers from states such as New Jersey and New York.
“That sounds like a kind of reasonable idea,” McConnell told radio host Hugh Hewitt Wednesday of allowing the deduction to apply to income tax as well. “There are a lot of these things that are floating back and forth, and it’s just impossible for me on your program or frankly to anybody else at this point to predict exactly how the final product turns out.”
Cleveland Plain-Dealer. Sen. Rob Portman: “Why the GOP tax cuts will be good for the middle class, good for America and good for business”
This bill also takes important steps toward reforming our business tax code and leveling the playing field internationally to make American workers and companies more competitive.
A recent Ernst & Young study said that since 2004, there would be 4,700 more American companies today if we would have had a 20 percent corporate tax rate, as we have in this bill.
In addition, there are between $2.5 trillion and $3 trillion of earnings trapped overseas because of our outdated tax code. Our bill encourages companies to bring that money back here and to invest in America. The result of these changes, the Tax Foundation says, will be nearly one million new jobs for the U.S. and more than 35,000 new jobs in Ohio.
Last week, more than 100 leading economists wrote an open letter to Congress in support of this bill, stating, "Economic growth will accelerate if the Tax Cuts and Jobs Act passes, leading to more jobs, higher wages, and a better standard of living for the American people."