House and Senate Republicans to Confer on Respective Tax Plans

By:
Chris Gaetano
Published Date:
Dec 5, 2017
Congress

Republicans in the House and Senate plan to meet this week to resolve the differences between their respective versions of the landmark tax reform bill, according to CNN Money.

Both the House version, which was approved last month, and the Senate version, which was approved over the weekend, are substantially similar in their policy goals, but there remain key differences between the two that could prove contentious as the legislation goes into conference. Some of the more prominent ones include: 

* While both the House and Senate versions cut the corporate tax rate from 35 to 20 percent, the House version makes the cuts immediately while the Senate version has a one year phase-in delay. 

* While both chambers increase the Child Tax Credit, the Senate boosts it to $2,000 per-child, while the House plan raises it to $1,600. Currently the credit is $1,000 per child under the age of 17. 

* The House plan repeals both the individual and corporate alternative minimum tax. The Senate version keeps it, as its removal would add $40 billion to the deficit

* The Senate version doubles the estate tax exemption to $11 million, while the House eliminates it completely. 

* The Senate's plan eliminates the individual mandate, which is the foundation of the Affordable Care Act. The House version does not. 

* The Senate bill grants certain pass-through entities a 23 percent deduction, which would then expire after 2025. The House would simply reduce the tax to 25 percent, from the current 43.4 percent, and create a 9 percent rate for the first $75,000 in earnings for certain smaller pass-through entities. 

* The Senate bill changes the rates of the seven personal income tax brackets from 10, 15, 25, 28, 33, 35 and 39.6 percent to  10, 12, 22, 24, 32, 35 and 38.5 percent. The House version collapses the seven tax brackets into four with rates of 12, 25, 35 and 39.6 percent. 

* The House version includes a $300 per person family credit which sunsets after 2022. The Senate has all individual tax breaks, including rate cuts and the doubling of the standard deduction, expire after 2025. 

* The House bill grants full and immediate expensing on equipment purchases for five years. The Senate version does the same, but phases out the benefit after five years rather than dropping it off entirely. 

* The House bill cuts the deduction cap for new home purchases to $500,000. The Senate version has not changed the current $1 million limit. 

One area where there were no differences between the two bills was the repeal of the state and local tax deduction, which is primarily used by people in higher-tax states like New York, California and New Jersey. The Senate had planned to eliminate it entirely, but the House kept a $10,000 deduction for local property taxes. After some wrangling, though, the Senate included this exception too. 

The NYSSCPA recently sent a letter to the New York Delegation of the U.S. House of Representatives, outlining its own position on the legislation. It expressed serious concerns about eliminating the state and local tax deduction provisions, which it said New Yorkers have relied upon since 1913; the capping of the property tax deduction to $10,000, which would not cover the average property taxes in six New York counties; and limiting the mortgage interest deduction to the first $500,000, which the Society said could contribute to a loss in home value and a corresponding drop in property taxes. 

Click here to see more of the latest news from the NYSSCPA.