House Ways & Means Committee Chairman Kevin Brady (R-TX) announced Dec. 8 that conferees from the House and Senate will hold an open meeting on Wednesday, Dec. 13 to begin the process of reconciling the two chambers’ versions of tax reform legislation.
Last week, the House and Senate both approved motions to go to a formal conference committee to work out the differences between the two versions of H.R. 1, the Tax Cuts and Jobs Act. In addition, the respective leaderships appointed members to participate in the conference.
Likely what will happen at Wednesday’s meeting is that the House and Senate conferees will make opening statements about what they would like to see in a final product, review the differences between the bills, and then adjourn to begin negotiations in private. Even before Brady’s announcement, key House and Senate members and their staffers had begun discussions on identifying the key differences and where the hot button issues are.
Under the agreed-upon budget process, any change that costs revenue will have to be made up somewhere else in order to keep net tax cuts under $1.5 trillion over 10 years. Thus, the conferees will have to strike a balance, weighing all of the demands coming from members of Congress, including:
- whether to keep the corporate tax rate at 20%;
- whether to drop the Senate provisions to reinstate an individual and corporate AMT;
- whether to preserve deductions for mortgage interest and state and local taxes; and
- whether to make the expanded child credit refundable.
One example of the jockeying is a Dec. 6 letter from 41 House Republicans to the Republican leadership objecting to a Senate proposal requiring that the cost of any specified security sold, exchanged or otherwise disposed of on or after Jan. 1, 2018, be determined on a first-in, first-out basis.
The conferees are:
- House Republicans: House Ways & Means Committee Chairman Kevin Brady (TX), Devin Nunes (CA), Peter Roskam (IL), Diane Black (TN), Kristi Noem (SD), Rob Bishop (UT), Don Young (AK), Fred Upton (MI) and John Shimkus (IL).
- House Democrats: House Ways and Means Committee Ranking Member Richard Neal (MA), Sander Levin (MI), Lloyd Doggett (TX), Raúl Grijalva (AZ) and Kathy Castor (FL).
- Senate Republicans: Senate Finance Committee Chairman Orrin Hatch (UT), Mike Enzi (WY), Lisa Murkowski (AK), John Cornyn (TX), John Thune (SD), Rob Portman (OH), Tim Scott (SC) and Pat Toomey (PA).
- Senate Democrats: Senate Finance Committee Ranking Member Ron Wyden (OR), Bernie Sanders (VT), Patty Murray (WA), Maria Cantwell (WA), Debbie Stabenow (MI), Robert Menendez (NJ) and Tom Carper (DE).
Meanwhile, the Joint Committee on Taxation issued a document detailing the differences between the two versions of the bill. Additionally, the Groom Law Group has posted a helpful side-by-side comparison of the key retirement, executive compensation and employee benefit provisions of the measures passed by the House on Nov. 16 and the Senate on Dec. 2.
Following completion of the conference committee’s work, the final version of H.R. 1 must then be voted on again by the House and Senate. President Trump and congressional Republicans have a self-imposed Dec. 22 deadline to complete the legislation, which doesn’t leave a lot of time.
ARA Pass-Through Campaign
The American Retirement Association launched a grassroots campaign Dec. 6 to encourage Congress to fix an unintended consequence of the tax reform legislation involving the tax treatment of pass-through entities.
The ARA believes the pass-through proposals could have a dramatic impact on the retirement security of small businesses and millions of small business workers. If the pass-through tax rates under consideration are enacted into law, many of those small business owners would face disincentives for making retirement plan contributions and for establishing workplace retirement plans for their workers.
The ARA is working to make sure this issue is addressed in the conference committee and is encouraging NAPA, ASPPA, ACOPA and NTSA members to contact their representatives in Congress to let them know how important this issue is and to urge them to fix it.