The Senate is on the floor with the “Manager’s Amendment” to the Tax Cuts and Jobs Act expected to drop any minute now. It will contain final mathematical fixes and outstanding provisions, so a final vote can then proceed. We expect this to occur in the next few hours, though debate could last until 8:00 - 9:00 PM - or even later depending on how long Democrats seek to delay it. Changes we anticipate include:
- Preserves the SALT deduction on properties up to $10K
- Increases the income threshold for pass-through deductions from 17.4-23%
- Preserves corporate AMT
- Increases repatriation rates to 14% and 7% matching the House
- Adds back some medical expense deductions
- Adds other minor amendments with price tags under $100MM
While Majority Leader McConnell and his team are still working to nail down these and perhaps other modifications, he proclaimed a short while ago that they have 50 votes for passage. The only known Republican Senator against the package - Bob Corker (R-TN) issued a statement at 4:50 PM.
McConnell has also won over Senator Ron Johnson (R-WI) by agreeing to raise the income threshold for pass-through deductions from 17.4-23%. It is currently unclear how they will pay for that or how they are accommodating Senator Jeff Flake (R-AZ). On a call just before lunch today with Dave Hoppe, the former Chief of Staff to Speaker Ryan, Hoppe covered a number of measures Senate leadership is weighing to use as pay-fors – but details are scant. Ideas that are being floated are: increasing the corporate rate on a step-up basis, slightly adjusting the corporate rate permanently, or sun-setting a number of provisions in the bill; they also have to pay for the amendment offered by Senator Susan Collins (R-ME) to retain a deduction of up to $10K on SALT.
Next steps:
- Senate is expected to pass their tax package this evening and recess until Monday or Tuesday
- On Monday, the House will return to vote to move to a Conference Committee with the Senate, and the Committee is expected to commence immediately and deliberate one to two weeks
- We expect the Conference Committee to conclude their work on Dec. 19th at the latest
A number of informal conversations have already taken place behind the scenes with senior staff in the House and Senate to mitigate the identifiable differences in their bills. Once we see the full Manager’s Amendment, we will know what's left to resolve and will update our comparison chart over the weekend. While significant differences remain in the two bills, we are optimistic that once the bill passes the Senate, the hard part is over - and the Conference Committee’s final product will prevail when sent back to both Chambers for final passage.
It is real this time. Call or email us with questions.
JT Taylor
Managing Director
Macro Policy
Ext. 273
@HedgeyeDC
Emily Evans
Managing Director
Health Policy
Ext. 231
@HedgeyeEEvans
