Senate Republicans unveiled on Thursday a different tax reform legislation than the one proposed by House Republicans and suggested delaying the corporate tax cut for one year, thus taking a different approach than President Donald Trump’s. The bill also repeals a state and local tax deduction and keeps in place deductions for adoption, medical expenses and the estate tax. The changes were made as a result of numerous objections to the House plan.
“I like it better than what I saw in the House version. The Senate was able to learn a lot from what the House found it,” said Senator Mike Rounds.
However, the differences between the House and Senate legislation would likely lead to difficult negotiations later in the year. Details of the tax legislation were revealed by the Senate Finance Committee during a morning meeting in the Strom Thurmond Room. Republican leaders are hopeful the legislation can be brought to the Senate floor at the end of this month.
The House Ways and Means Committee also approved its own separate tax legislation which will likely be voted in the House next week. The two versions have a similar structure and both cut corporate tax by 20 percent, with the only difference that the Senate legislation delays it to 2019. That, in turn, would provide money for changes to other deductions. The House and President Trump believe it is necessary to cut it immediately in order to help corporations and create more jobs.
The legislation, however, does not mention an Obamacare individual shared responsibility payment repeal. Senator Tom Cotton, one of the proponents of the repeal, called the tax “unfair” and said its repeal should be a priority.
“This tax is deeply unpopular, it punishes working-class families for not being able to afford insurance, and repealing it would save over $300 billion.”
The deduction for state and local taxes is also eliminated with the bill, while the $1 million threshold for mortgage interest tax deduction is kept in place. The House bill lowers it by half. Among other changes is the top individual tax rate, which is set to 38.5 percent. The tax rate for small businesses has been lowered as well.
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