House and Senate Republicans will now attempt to reconcile the competing tax bills they passed into one measure that can pass both chambers again. Lawmakers are confident they can finish this month.
Here's a guide to some of the key issues.
Odds and Ends
Expirations -- The Senate bill sets almost all of its individual tax provisions and the tax cut for pass-through business to expire after 2025. The House sets a family credit to expire after 2022.
Alternative minimum tax -- The House bill repeals the individual and corporate alternative minimum taxes, parallel tax systems that deny some breaks. The Senate bill retains both, though it narrows the individual AMT. The corporate AMT retention is prompting some companies to complain they could lose tax breaks the bill's authors intended to protect.
Johnson Amendment -- The House bill would allow charities, including churches, to engage in some political activity, ending a long-standing ban authored by then- Sen. Lyndon Johnson. The Senate bill has no such language.
Health care -- The Senate bill repeals the individual mandate to have insurance. That freed up more than $300 billion the government would otherwise spending on Medicaid and insurance subsidies. The House bill has no such language. But House Republicans would like to repeal the Affordable Care Act. Sen. Susan Collins (R., Maine) also wants the House to pass separate legislation shoring up the individual insurance market.
Alaskan drilling -- The Senate bill would open the Arctic National Wildlife Refuge for oil drilling. The House bill doesn't.
Rates. House Republicans have a four-bracket structure and a top tax rate at 39.6%. Senate Republicans kept seven brackets but lowered the top rate to 38.5%
Child tax credit -- The House credit is $1,600 per child, phasing out for married couples starting at $230,000 of income. The House also has a $300 credit that parents could take. The Senate has a $2,000 per-child tax credit that starts phasing out at $500,000.
Estate tax -- Both bills double the exemption to about $11 million per person. But the House bill fully repeals the tax permanently in 2025. The Senate bill doesn't fully repeal the law and ends the larger exemption in 2026.
Mortgage interest -- The House bill caps the mortgage interest deduction at loans of $500,000. The Senate bill retains the current $1 million threshold.
State and local taxes -- Both bills now allow a $10,000 deduction for property taxes but no break for state and local income or sales taxes. California Republicans who voted for the first House bill likely want more on the second round.
Medical expenses -- The House bill repeals the itemized deduction for medical expenses, affecting people in nursing homes and those with expensive chronic illnesses. The Senate bill expands the deduction for 2018 and 2019.
Pass-throughs -- The House bill benefits passive owners of partnerships and other firms that pay taxes through their owners' returns. It offers limited breaks for professional services firms such as lawyers and consultants. The Senate bill has a broader deduction that is more generous to active business owners and professional services firms that earn under $250,000 for individuals and $500,000 for married couples.
Corporate tax rate -- Both bills set the corporate tax rate at 20%. The Senate delays that start date until 2019. But President Donald Trump reopened the discussion by saying Saturday that the final result could be 22%.
Interest expenses -- The Senate bill's limit on interest deductions is much more restrictive than the House's version.
International tax rules -- The two bills both make major changes to the rules affecting U.S. companies' foreign earnings and the rules for payments from U.S. companies and U.S. subsidiaries of foreign companies to related foreign firms. The architecture of the provisions is somewhat different.
Write to Richard Rubin at email@example.com
(END) Dow Jones Newswires
December 03, 2017 19:44 ET (00:44 GMT)