On Saturday, December 2, in the early morning hours, the Senate voted to pass the “Tax Cuts and Jobs Act,” after vigorous debate and a number of amendments. The bill, which needed only 50 votes to pass (with Vice President Pence as a tiebreaker) under reconciliation rules, passed in a 51-49 vote, eliminating the need for Vice President Pence to break a tie.
Previously expected to pass November 30, efforts to push the bill through stalled. The reason was a trigger mechanism that had been contemplated to quell deficit fears by increasing taxes if economic growth didn’t meet or exceed projections. The trigger was found to violate budget rules that would shield the vote from a filibuster. As a result, the trigger was not added, calling key Republican votes into question. Then, the Joint Committee on Taxation projected an additional $1 trillion in deficit impacts over the next ten years, even taking expected economic growth into account. Debate and deal-making continued through Friday, December 1.
“Tax reform has taken a step closer to reality with Saturday’s vote,” said Amy Pitter, CEO of the MSCPA “we will continue to be fully engaged with the efforts of the AICPA, and keep you informed through the next steps which will include a conference which will attempt to reconcile differences between the Senate and House bills,”
The final version of the bill features some changes from the initial version.
Most of the bill’s tax cuts for individuals would expire in 2025 to comply with Senate budget rules. The reduction in corporate rates to a flat 20%, however, would be permanent.
The House has already passed its own version also termed the “Tax Cuts and Jobs Act.” Though a high hurdle has been cleared, the process is far from over. Any bill must be approved by both houses of Congress and signed by the President. With two different bills on the table, Congress will need to reconcile differences into a single unified bill, which would then require Congressional approval.