In the early morning hours of December 2nd, the Senate passed its tax reform bill, with a 51-to-49 vote that mostly united states capitolfollowed party lines (Senator Bob Corker was the lone Republican to dissent, citing deficit concerns). The recent Senate vote follows the House’s tax bill which was passed several weeks earlier.  While the House could choose to expedite legislation by voting on the Senate bill without amendments, Republican leadership has indicated a conference committee will be assembled to reconcile differences between the bills.  Given the slim margin that the bills passed the House and Senate, modifications will need to be done in a manner that finds suitable compromises while still positioning the final bill to carry a majority vote in both houses.

Key Points:

The Senate bill shifted to align with the House on several key issues, though notable differences still remain (excerpted list below):

 

  • Attention will now shift to the conference committee tasked with creating a unified bill.
    • The goal of the conference committee is to reconcile differences between the House and Senate bills via a conference report (rather than the more arduous process of both houses making amendments to each other’s bills, potentially resulting in prolonged back-and-forth negotiations).
    • Each party (Democrats and Republicans) names conferees in proportion to the seats held in each chamber.
    • According to the Congressional Research Service, conferees “as a general rule…may not change a provision on which both houses agree, nor may they add anything that is not in one version or the other.  Furthermore, conferees are to reach agreements within the ‘scope’ of the differences between the House and Senate positions.”
    • If the committee’s conference report is passed by a majority of each house’s delegation, the conference report is then submitted for a floor vote (the conference report is not open to further amendment on the floor).
    • The first chamber to consider the conference report can choose 1) to accept or reject the conference report or 2) to recommit the conference report back to the committee.  After one chamber has taken action on the conference report, the other chamber can only accept or reject the conference report.
    • If a chamber rejects the conference report, the committee can make modifications and resubmit for another floor vote (while possible, it is generally rare for this to occur since the committee solicits input from congressional leaders before finalizing the conference report).
  • With year-end fast approaching, Republicans hope to produce a conference report shortly that will pass the House and Senate in time for President Trump to sign the legislation before Christmas.
  • The House and Senate bills give some indication as to what tax reform might entail, though taxpayers (in consultation with trusted advisors) should continue to monitor tax reform developments to evaluate planning opportunities.