December 05, 2017

What’s Next

The GOP Tax Bill has passed the Senate, here’s what happens next.

by Chris Thomas

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This is fine — Photo by Quino Al

With the Senate’s passage of the GOP’s Corporate Tax Cut, Republicans are celebrating their first real step towards a legislative success since President Trump took office. But while the bill has cleared the Senate, the next step is not the President’s desk. The House and Senate passed different bills; they must be reconciled before the President can sign anything.

Conference Committee

Traditionally this reconciliation takes place in a conference committee but for the GOP tax bill this is a risky move. Conference happens — quite deliberately — out of the public eye and once a bill exits conference its not subject to further amendment (lest it have to return to conference). Critically, this means that whatever the conference committee produces, the GOP is stuck with. The vote to clear the bill though both the House and Senate was razor thin and the entire process was greased with political horse-trading and more than a little bit of outright graft.

None of that will be an option on the post-conference bill. It will live or die on its own merits.

As Written

Of course, that can be avoided if the House will just pass the Senate bill. Indeed, following the Democrats’ loss of Ted Kennedy’s Senate seat to Republican Scott Brown in 2010, this was exactly the strategy used to push the Affordable Care Act through. The already-passed Senate text was cut-and-pasted over an existing House bill and put to a vote to avoid a Republican filibuster. The same tactic could be used to get the Corporate Tax Cut onto Trump’s desk.

But there’s a catch and it’s a doozy.

Exactly as written…

The point — the entire point — of this legislative push was to drop the base corporate tax rate to 20% and abolish the Alternative Minimum Tax. The AMT is essentially a floor for corporate taxation. Under current law companies are taxed at 35% and can write off down to about 20% but below that the AMT kicks in and further deductions are strictly limited.

In the mad dash to push a massively unpopular tax bill through in the dead of night the Senate Republicans forgot to read their own bill. Looking for funds to placate holdouts, they struck the repeal of the AMT and forgot to lower it.

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Not the relevant section, but the actual text of the bill the Senate voted on looked like this.

The result is that the Senate bill sets the corporate base rate to 20% and the corporate alternative minimum rate to 20%. It effectively nullifies nearly every corporate deduction and write-off in the US tax code.

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It’s difficult to imagine how that could happen when voting on a bill like this on short notice

Back to Conference

Which means this bill has to go back to the Conference committee because there’s no possible way the GOP can hang their hat on the Senate version as it is. That means that it has to clear the Senate again and it has to clear the House again.

And that means that this thing isn’t even close to over.

Meanwhile the government is about to run out of money, the Christmas recess is coming up, and the entire House and one-third of the Senate gets to go home, worry about reelection, and face an American public who strongly disapprove of the Corporate Tax Cut, the Obamacare repeal attempt, and Donald Trump, and Republicans in general.

Tell Congress what you think!

The coming political maelstrom over the debt limit could sink the Corporate Tax Cut or it could provide the cover necessary to pass it. Text RESIST to 50409 to tell your representatives or Senators what you think about this or any other issue before Congress or use Facebook messenger to do the same thing by clicking here.

You can also text TAXES instead to see the immediate, estimated impact on your tax bill based on the Trump framework.

More On Taxes

Want to learn more about the Trump’s corporate tax cut and how it’ll affect you? We’ve got you covered.

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