H.R.1 – Tax Cuts and Jobs Act

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Week ending November 17, 2017

H.R.1 – Tax Cuts and Jobs Act

Brief

What follows is the content of the House version of HR 1. The Senate bill is still in play and will be further reported on December 7th.

Impact on individuals –

The bill eliminates the deduction for state and local income and sales taxes, while capping it for property taxes at $10,000;

Limits the mortgage interest deduction used by homeowners to $500,000 worth of mortgage debt;

Increases the standard deduction to $12,000 for single filers, $18,000 for heads of household, and $24,000 for joint filers (currently $6,500 for single filers, $9,550 for heads of households, and $13,000 for married filers). Eliminates the personal exemption;

Expands the child tax credit from $1,000 to $1,650, and increases the phaseout threshold from $110,000 to $1 million for married filers.

raises taxes to the tune of $65 billion on student loan cost, including through elimination of the student loan interest deduction, making it harder for graduates to pay off debt;

Eliminates the medical expense deduction, which Americans with disabilities, long-term care needs, and high dental expenses rely on to afford care;

Eliminates a deduction for teachers who purchase supplies for their classroom;

Eliminates the deduction for moving expenses to take a new job and taxes employer-provided moving expenses;

Eliminates the deduction for dependent care assistance, making it harder for families to afford day care, nursery school, or care for aging parents;

Eliminates the Lifetime Learning Credit, which helps nontraditional students earn a degree;

Eliminates the casualty loss deduction, which Americans use to offset repairs from damage from disasters; and

Eliminates personal exemptions, which parents currently claim for themselves, their spouse, and dependents and which grows with the size of their family.

The current estate tax exemption is increased to $10 million, indexed for inflation, with repeal after six years.

The deduction for donations to a 401(k) remain.

Income and time are factors of where middleclass tax cuts would be applied and for how long:

The House Joint Committee on Taxation has concluded that in 2019 58.2 percent of households would receive a meaningful tax cut, while 8.3 percent would face a tax hike. By 2027, fewer than half of Americans would have a tax cut worth $100 or more, while about 1 in 5 would receive a hike that large, compared with current law.

It is also projected that the plan would cut taxes by about $1300 for about 68 percent of families in the middle class, (those earning between about $50,000 and $160,000 per year) but those savings turn into higher taxes beginning for some in 2020 and others from 2023 through 2027.

Impact on corporations –

Cuts rate to 20 percent, effective tax year 2018.

Increases the Section 179 small business expensing cap from $500,000 to $5 million, with the phaseout beginning at $20 million, and maintains current depreciation schedules for real property.

Caps net interest deduction at 30 percent of earnings before interest, taxes, depreciation, and amortization.

Eliminates net operating loss (NOL) carrybacks while providing for indefinite net operating loss carryforwards, increased by a factor reflecting inflation and the real return to capital, while restricting the deduction of NOLs to 90 percent of current year taxable income.

Increases small business eligibility for small businesses, from $5 million to $25 million.

Eliminates credits for orphan drugs, energy, private activity bonds, rehabilitation, and contributions for capital, among others.

Moves to a territorial system with base-erosion rules including the inclusion of 50 percent of excess returns by controlled foreign corporations in U.S. shareholders’ income, and an excise tax on payments made to foreign firms unless claimed as effectively connected income.

Enacts deemed repatriation of currently deferred foreign profits at a rate of 14 percent for liquid assets and 7 percent for illiquid assets (changed in manager’s amendment).

(Full text of H.R. 1 congress.gov)

SponsorRep. Brady, Kevin [R-TX-8] (Introduced 11/02/2017)

Status: passed House / being debated in the Senate / Passed Senate / to House conference

VOTES and FLOOR ACTION

HOUSE

On Passage: On passage Passed by the Yeas and Nays: 227 – 205 (Roll no. 637)

On motion that the House instruct conferees Failed by the Yeas and Nays: 186 – 233 (Roll no. 654).

House Amendments:

Motion to recommit:

Text of the motion:

SENATE

On Passage: H.R. 1 (Tax Reconciliation Act), as amended.  The bill was read for a third time.  Final passage.  Yeas and nays ordered.  The bill, as amended, passed by a vote of 51-49.

Procedural Actions:

Motion to Proceed to H.R. 1 (Tax Reconciliation Act). The Motion to Proceed was agreed to by a vote of 52-48.

Senate Amendments:

Proposed Senate amendments.

Hatch amend #1618 (To improve the bill).

Wyden Motion to Commit H.R. 1 to the Committee on Finance ; To provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018. Failed 48 to 51

Brown Motion to Commit the bill H.R. 1 (Tax Reconciliation Act) to the Committee on Finance.  Yeas and nays ordered.  The Motion to Commit was not agreed to by a vote of 48-52.

Casey Motion to Commit the bill H.R. 1 (Tax Reconciliation Act) to the Committee on Finance.  Yeas and nays ordered.  The Motion to Commit was not agreed to by a vote of 48-51.

King Motion to Commit the bill H.R. 1 (Tax Reconciliation Act) to the Committee on Finance. Yeas and nays ordered. The Motion to Commit was not agreed to by a vote of 48–52.

Stabenow Motion to Commit the bill H.R. 1 (Tax Reconciliation Act) to the Committee on Finance. Yeas and Nays ordered. The Motion to Commit was not agreed to by a vote of 45–55.

Nelson Motion to Commit H.R. 1 (Tax Reconciliation Act) to the Committee on Finance. The Motion to Commit was not agreed to by a vote of 48-52.

Baldwin Motion to Commit H.R. 1 (Tax Reconciliation Act) to the Committee on Finance. The Motion to Commit was not agreed to by a vote of 48-52. Transitional jobs program

Cardin Motion to Commit H.R. 1 (Tax Reconciliation Act) to the Committee on Finance. The Motion to Commit was not agreed to by a vote of 43-57.

Schumer Motion to Adjourn until Monday, December 4, 2017.  Yeas and nays ordered.  The Motion was not agreed to by a vote of 48-52.

Hatch amend #1855 (To provide a perfecting amendment).  Agreed to by Unanimous Consent.

Hatch amend #1618 (To improve the bill), as amended.  The amendment is considered original text for purposes of further amendment.

Sanders amend #1720 (To create a point of order against legislation that cuts Social Security, Medicare, or Medicaid benefits).  Enzi Point of Order that the amendment violates provisions of the Congressional Budget Act.  Sanders Motion to Waive the Budget Point of Order.  Yeas and nays ordered.  The Motion to Waive was not agreed to by a vote of 46-54.  The Point of Order is sustained and the amendment falls.

Brown amend #1854 (To amend the Internal Revenue Code of 1986 to increase the Child Tax Credit).  Enzi Point of Order that the amendment violates provisions of the Congressional Budget Act.  Brown Motion to Waive the Budget Point of Order.  Yeas and nays ordered.  The Motion to Waive was not agreed to by a vote of 48-52.  The Point of Order is sustained and the amendment falls.

Rubio amend #1850 (To increase the refundability of the child tax credit).  Wyden Point of Order that the amendment violates provisions of the Congressional Budget Act.  Rubio Motion to Waive the Budget Point of Order.  Yeas and nays ordered.  The Motion to Waive was not agreed to by a vote of 29-71.  The Point or Order is sustained and the amendment falls. Amendment would raise corporate taxes from 20% to 24%

Menendez Motion to Commit the bill to the Committee on Finance.  Yeas and nays ordered.  The Motion to Commit was not agreed to by a vote of 48-52.

Cruz amend #1852 (To allow limited 529 account funds to be used for elementary and secondary education, including homeschool).  Yeas and nays ordered.  The amendment is agreed to by a vote of 51-50 with Vice President Pence voting in the affirmative.

Kaine amend #1846 (To provide middle class tax relief).  Toomey Point of Order that the amendment violates provisions of the Congressional Budget Act.  Kaine Motion to Waive the Budget Point of Order.  Yeas and nays ordered.  The Motion was not agreed to by a vote of 34-65.  The Point of Order was sustained and the amendment falls.

Manchin Motion to Commit the bill to the Committee on Finance.  Yeas and nays ordered.  The Motion was not agreed to by a vote of 38-61.

Cantwell amend #1717 (To strike Title II).  Murkowski Point of Order that the amendment violates provisions of the Congressional Budget Act.  Cantwell Motion to Waive the Budget Point of Order.  Yeas and nays ordered.  The Motion was not agreed to by a vote of 48-52.  The Point of Order is sustained and the amendment falls.

Merkley amend #1856 (Strikes provision).  Yeas and nays ordered.  The amendment was agreed to by a vote of 52-48.

Hatch amend #1618 (To improve the bill), as amended.  Agreed to by Voice Vote.

COST AND IMPACT

Cost to the taxpayers:  Adds $1.4 trillion to the deficit over 10 years.

Pay-as-you-go requirements:  Data not available

Regulatory and Other Impact: Data not available

Dynamic Scoring:   Data not available

Tax Complexity:  Not applicable to this bill.

Earmark Certification:  Data not available

Duplication of programs: Data not available

Direct Rule-Making:  Data not available

Advisory Committee Statement: Data not available

Budget Authority: Data not available

Constitutional Authority:   Assumed.

 

More Bill Information:

 

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