On November 9, the U.S. House of Representatives Ways and Means Committee approved a comprehensive tax reform package, H.R. 1, the Tax Cuts and Jobs Act, setting up a likely floor vote in the House next week. The passage of the tax framework concluded after four days of markups, during which House Republicans voted down dozens of House Democrat amendments before approving the final bill. Many of the amendments voted down would have preserved key county priorities, including the state and local tax (SALT) deduction, private activity bonds (PABs) and advance refunding bonds. For a detailed review of H.R. 1 and its impact on counties, click here.
Broadly, the House plan lowers individual and corporate tax rates, eliminates many deductions and credits and nearly doubles the standard deduction available to taxpayers. After releasing an initial version on November 2, House Ways and Means Chairman Kevin Brady (R-Texas) made several adjustments in the final package related to small business provisions, the adoption tax credit and international tax provisions.
Following the Ways and Means Committee’s approval of H.R. 1, Senate Republicans released their own version of a tax reform plan. Though the two bills contain some substantial differences, the Senate version also impacts some key county priorities: it fully eliminates the SALT deduction (the House bill only partially repeals the deduction) and also repeals the use of advance refunding bonds, which counties use to save county and taxpayer dollars on infrastructure projects. A detailed comparison of the two bills and their impacts on counties is forthcoming.
While the initial versions in each chamber contain some substantial differences, ultimately both chambers must agree on the same package before taking a final vote. Republicans plan to use the budget reconciliation process to pass the bill, requiring only a simple majority vote in the Senate. However, this process adds additional financial restrictions and rules to the legislation, which could impact the extent to which lawmakers can make desired changes to the tax code.
NACo will continue monitoring tax reform legislation and its potential impact on counties.
Additional NACo Resource:
- Click here for the analysis of H.R. 1, the Tax Cuts and Jobs Act