Last night the house passed the Tax Cut & Jobs Act Bill with ease. Next up is the Senate vote. It’s important to understand the House and the Senate are voting on two different tax reform bills. Below is a chart illustrating the main differences between the House version and the Senate version of the tax reform bill.
As you can see, there are a number of dramatic differences between the two bills. The easy part was getting the House to approve their version because the Republican Party own 239 of the 435 seats. In other words, they own 55% of the votes.
The Senate Vote
Next, the Senate will put their tax reform bill to a vote. The vote is expected to take place during the week of Thanksgiving. However, in the Senate , which the Republican have the majority, they only have 52 of the 100 seats. In this case, they would need at least 50 “Yes” votes to get the bill approved in the senate. It’s 50, not 51 votes, because in the event of a “tie”, the Vice President gets a vote to break the tie and he is likely to vote “Yes” to keep tax reform moving along.
Once the House and Senate have approved their own separate tax bills, they will then have to begin the reconciliation process of blending the two bills together. This will be the difficult part. The two tax bills are dramatically different so there will be a fair amount of grappling between the House and the Senate committees as to which features stay and which features get tossed out or adjusted as part of the final tax bill. In the end, the final tax reform bill cannot add more than $1.5 Trillion to the national debt over the next 10 years. Otherwise, the bill would need to return to the Senate and would require “60” votes to approve the bill. There is a slim too no chance of that happening.
Tax Reform by Christmas
President Trump wants the bill on his desk to sign into law before Christmas. While it seems likely that the Senate will pass their tax bill next week, the battle will take place in the reconciliation process that will begin immediately after that vote. It’s a tall order to fill given that there are only six weeks left in the year and how different the two bills are in their current form. However, don’t underestimate how badly the Republican party wants to put a run on the scoreboard before the end of the year. If they get tax reform through in the last week of the year, it’s an understatement to say that it will be an intense final week of December for year-end tax planning. Stay tuned for more………
Hi, I’m Michael Ruger. I’m the managing partner of Greenbush Financial Group and the creator of the nationally recognized Money Smart Board blog . I created the blog because there are a lot of events in life that require important financial decisions. The goal is to help our readers avoid big financial missteps, discover financial solutions that they were not aware of, and to optimize their financial future.