National Association of Counties
As lawmakers return to Washington following the Thanksgiving recess, the U.S. Senate has resumed its efforts to enact comprehensive tax reform, as Republicans hope to pass a bill the week of November 27. On November 16, the U.S. House of Representatives approved H.R. 1, the Tax Cuts and Jobs Act, putting pressure on the Senate to approve its own version of the bill. Under the budget reconciliation process, which only requires a simple majority vote in the Senate, Republicans cannot afford to lose more than two votes on the bill if they do not pick up Democratic support.
The comprehensive tax reform proposals moving through Congress could impact counties in a variety of ways. Of particular concern to counties are the proposed eliminations of the state and local tax (SALT) deduction and advance refunding bonds. NACo released an initial analysis of H.R. 1 and its impact on counties, as well as a comparison chart between the two chambers’ bills, which can be viewed here.
Several Republican senators have expressed concerns about the Senate’s current version of the legislation, and leadership must address at least a few of these issues to secure the 50 votes necessary for passage. Senators Bob Corker (R-Tenn.) and Jeff Flake (R-Ariz.), who have long focused on reigning in growing budget deficits, voiced concerns on November 27 that the current plan could expand government deficits. Other members, including Senators Susan Collins (R-Maine) and Jerry Moran (R-Kan.), are concerned with the bill’s proposed repeal of the individual mandate established under the Affordable Care Act (ACA). Senators Ron Johnson (R-Wis.) and Steve Daines (R-Mont.), meanwhile, have both already indicated they will not support the bill in its current form due to the way pass-through businesses, or businesses filing on the individual side of the tax code, would be treated. Finally, several other senators have also expressed varying concerns, including Senators John McCain (R-Ariz.), Lisa Murkowski (R-Alaska) and James Lankford (R-Okla.). With so many different factors at play, leadership faces a challenging task of completing the bill before the end of November, which could cause the efforts to slip later into December.
If Senate leadership is able corral at least 50 votes (with Vice President Mike Pence serving as the tie-breaker) and pass the bill, the two chambers would still need to reconcile differences between the Senate’s framework and the recently passed House version. Both chambers must approve a final package before sending it to the president’s desk. Congressional Republicans hope to pass tax reform legislation before the end of 2017.
However, Congress also faces a series of other deadlines and decisions that could slow the tax reform process. Although the current government funding agreement expires December 8, a clear path forward on a spending agreement has not yet emerged. In addition to government funding, Congress still must reauthorize the Children’s Health Insurance Program (CHIP) and other expired health programs, extend the National Flood Insurance Program (NFIP) and address immigration issues.
NACo will continue tracking tax reform efforts and advocating for key county priorities.
Additional NACo Resources:
<p>In March of 2021, the American Rescue Plan Act of 2021 authorized the $350 billion State and Local Coronavirus Fiscal Recovery Fund (Recovery Fund), which provided $65.1 billion in direct, flexible aid to
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<p>All matters pertaining to the financial resources of counties, fiscal management, federal assistance, municipal borrowing, county revenues, federal budget, federal tax reform, elections and Native American issues.</p>
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