Step one complete.
House Republicans on Thursday passed their tax overhaul bill, 227-205, which will now go to the Senate and be used as a vehicle to pass its own measure. Thirteen Republicans voted against the measure; no Democrats voted for the measure.
If the Senate passes its own measure, GOP leaders say they’ll form a conference committee to reconcile the differences.
No Democrats joined Republicans in voting for the tax bill, which is moving through the budget reconciliation process so that the Senate can also pass it without Democratic votes if needed.
The GOP’s goal is to have a finalized measure to send to President Donald Trump’s desk by Christmas.
House passage of the measure may be just one step in the process, but it is significant for a number of reasons.
One is that this is the first major rewrite of the tax code to get a floor vote in recent history, setting the stage for the first tax code overhaul since 1986.
Another is that passage of the bill shows that lawmakers are not afraid to go after so-called sacred cows in the interest of larger tax changes — and that they can ignore the flood of lobbying and special interest opposition that comes with the tax-writing process. While some would argue this isn’t a good thing, it does prove that a tax overhaul is possible when many thought it was not.
Lastly, this puts the GOP closer to achieving its first major legislative victory under the unified Republican government. Trump and congressional Republicans have been clamoring for a legislative achievement, arguing they need a win as the 2018 midterm elections approach.
Watch: Who’s Writing the Tax Bill
The road ahead, however, won’t be an easy one. The emerging Senate plan is drastically different from the House measure.
Many issues will need to be reconciled in conference, including the individual rate structure, temporary versus permanent cuts, provisions providing tax relief for small businesses organized as pass-through entities that pay their business taxes on individual returns and international provisions designed to prevent multinational corporations from avoiding taxes.
There are also the issues of whether the final bill should include repeal of the 2010 health care individual mandate (the House bill does not but the Senate plan currently does), repeal of the estate tax (the House repeals it after seven years while the Senate never does) and full or partial repeal of the state and local tax, or SALT, deduction (the Senate gets rid of it altogether but the House retains a $10,000 deduction for property taxes).
Differences on the mortgage interest deduction, medical expense deduction, private activity bonds and whether to repeal a longstanding provision barring churches and related tax-exempt organizations from engaging in political activity are also on the long list of things that will need to be reconciled in conference.
Even with the House compromise on SALT, some members voted “no” because they felt it wasn’t enough for their constituents. That included New Jersey Reps. Leonard Lance, Frank LoBiondo and Christopher H. Smith; New York Reps. Dan Donovan, Peter T. King, Lee Zeldin, John J. Faso and Elise Stefanik; and California Reps. Darrell Issa and Tom McClintock.
“This tax bill is one I wish I could vote for, I wish I could support,” Faso said Thursday, but said he ultimately decided against it because of the concern that the partial repeal of SALT would cause New York taxpayers to flee the state for lower tax jurisdictions.
Faso, Donovan, King and Zeldin said they hope their concerns might still be addressed in a conference committee. Asked for the basis for that hope given they oppose both the House and Senate positions on SALT, King said there could be something the Senate does to create a new bloc of “no” votes in the House, in which case leaders might need to bring the SALT members over to “yes.”
Zeldin said many members who voted “yes” today still have other concerns they want to address before agreeing to a final bill and suggested the SALT members are the largest bloc with a singular concern that could be fixed.
Indeed a lot of members are holding out hope that the conference committee will fix a wide array of flaws in the bill. Some may ultimately get what they want, but many are likely to be disappointed.