Last week, House Republicans unveiled their tax reform plan, the “Tax Cuts and Jobs Act,” which would cap the state and local property tax deduction at $10,000 per return, while completely eliminating the deduction for state and local income taxes. The Senate released a summary of their tax plan on Thursday.
Senate Finance Chairman Orrin Hatch (R-Utah) has shied away from a definitive timeline on the bill’s path through his Committee. Most Republican senators represent lower-tax states, unlike the House where the GOP’s majority includes 73 members from high-tax states like California and New York. As a result, the Senate faces less political pressure on eliminating the deductions for either the state/local property tax or the state income tax; however, overall passage will be complicated by the GOP’s slim majority in the Upper House. Among the bill’s chief concerns in its current iteration is that it is $75 billion over the reconciliation requirements that would allow Republicans to pass the measure without Democratic votes in the Senate. The income and property tax deductions as well as the mortgage interest deduction are among the provisions of the bill seen as “in-play” among senators who are trying to draft a proposal that could pass the House and Senate under the rules of reconciliation.
The House passed its tax reform bill out of the Ways and Means Committee on Thursday afternoon. While the House Leadership maintains its goal is to have the House pass its tax reform version before Thanksgiving, timing remains unclear on when they can move the bill to the House Floor. There are a variety of issues that remain unresolved, including state/local property tax or the state income tax deductions, excise taxes, pass-through rates. The U.S. Senate intends to begin its mark-up on its version on Monday; however, there is no full legislative text of the Senate’s proposal as of the time of this writing.