The United States Congress has returned to Washington D.C. from the Thanksgiving holiday, and attention returns also to U.S. tax reform legislation. It remains the publicly-stated goal of the Republican leadership in the Congress to present President Trump with legislation to sign before the end of 2017. When Congress recessed, the U.S. House of Representatives had already passed their version of H.R. 1, the Tax Cuts and Jobs Act (the “House bill”), while the U.S. Senate Finance Committee had completed their markup of H.R. 1 (the “Senate bill”) and published the first complete legislative text of the Senate bill.
This week’s focus is on the full Senate’s deliberations on the Senate bill. Earlier this week, the Senate Budget Committee agreed, on a straight party-line vote, to move the Senate bill to the floor of the Senate for consideration without further amendment. The Senate’s public deliberations are widely expected to be accompanied by significant behind-the-scenes negotiation, the results of which seem likely to produce further amendments to the Senate bill before being voted on by the whole Senate. The Republican majority will be working to ensure that those amendments conform to the arcane “reconciliation” rules of the Senate that would allow the bill to pass with a simple majority – effectively meaning that no Democratic votes in the Senate would be required – while ensuring the support of enough Republican senators to secure passage.
If the full Senate passes their version, attention will be turned to reconciling the House bill and the Senate bill. A conference committee consisting of members of both the House of Representatives and the Senate would be formed to go through House bill and Senate bill in detail, in order to agree on a single joint bill. If the conference can reach agreement on such a joint bill, that legislation would have to be passed again by a simple majority of both the House and Senate, without amendment, and then signed by the President in order to be enacted into law.
The bottom line is that there remain at least two significant rounds of potentially significant amendment (this week by the Senate, and then again by a conference committee) to the Tax Cuts and Jobs Act before it becomes law, and we will continue to provide updates as amendments are published. Most of the provisions as drafted in both bills have a proposed effective date of January 1, 2018, with a notable exception of the Senate bill’s effective date for reducing the corporate tax rate, proposed effective in 2019. All taxpayers, and particularly those taxpayers whose operations and planning would be significantly impacted by the proposed changes in law immediately upon enactment, should continue to monitor developments closely. Please feel free to reach out to any member of the Proskauer Tax Group to discuss either the procedural matters described in this post, or any substantive aspect of the House bill or Senate bill.