On Thursday, the House Ways and Means Committee approved their tax bill (HR 1) by a vote of 24-16 while the Senate unveiled the outline of their version of tax reform. After various changes the House bill preserved the Adoption Tax Credit while the Senate bill also retains the credit in their version. Aside from this common feature, and a few others, perhaps the most common overlap between the two bills is that they will both increase the deficit by $1.5 trillion over ten years.
The next steps will be for the House to pass their bill on the floor, likely this Thursday, November 16 while the Senate Finance Committee takes up their bill starting today, Monday November 13. After that the Senate will likely debate their bill on the Senate floor under the debate restriction of reconciliation and then get the 50 votes they would need to pass the bill, likely the week after Thanksgiving, Monday November 27. If that happens there will have to be a conference committee between the two houses to settle their differences with the goal of completing that by the holiday break so the President can sign it. But first they must resolve their differences.
The House, consistent with how they handled the Monday through Thursday debate, released a final package of amendments just before final passage pursuing their Majority-party only strategy. At about the same time the Senate Finance Committee released their “Chairman’s Mark.”.
As noted both bills would increase the deficit by $1.5 trillion, preserve the Earned Income Tax Credit, cut corporate taxes, and eliminate a range of deductions and exemptions. If the deficit is increased through final passage it will only increase the pressure on human service programs but especially child welfare. Increasingly efforts to raise or restore funding for programs like CAPTA state grants ($26 million), the Adoption Opportunities Act ($39 million) and Child Welfare Services ($269) draw a standard “there’s no money” even from some normally friendly members of Congress. Expect that attitude and response to increase if deficits explode after a tax deal.
When the two houses start to resolve their differences (once the Senate finishes its work) there are several tax differences to deal with. These include the number of tax brackets (four v. seven), the range of different tax breaks and deductions, whether to let taxpayers deduct their state and local income and property taxes, and the handling of mortgage interest on a house.
In terms of children, the one victory appears to be a maintenance of the Adoption Tax Credit and the expansion of the Children’s Tax Credit but the fact that the House plan does not extend the “refundability” part of this credit (increasing from $1000 to $1600) means that many families with lower incomes would be left out of the benefit. One of the significant differences on the two bills is how they handle what is called “SALT” or state and local taxes. This deduction, taken on the long form allows taxpayers to deduct state and local income taxes as well as property taxes. The Senate eliminates the state and local income tax deductions while the House has negotiated partial repeals.