After much deliberation, the Senate tax bill narrowly passed during the early-morning hours on Saturday in a vote of 51-49. Details of the final plan are still forthcoming.
This week, real estate professionals across the country awaited the vote for the Senate’s proposed tax overhaul bill, which has sparked controversy across the industry for its potential negative impact on the mortgage interest rate deduction and homeownership incentives. While Senate Republicans rushed to make significant changes to the bill in order to appease representatives that were on the fence, they received last minute approval by Sen. John McCain, who was said to be a key voter and had not yet stated his stance on the bill.
“I believe this legislation, though far from perfect, would enhance American competitiveness, boost the economy and provide long-overdue tax relief for middle-class families,” said McCain in a statement.
Compromises were made throughout the day on Friday to meet the requests of some Republican Senators, however, Democrats voiced growing concerns over hastily made amendments, some included as handwritten changes in the margins of the text. As the night wore on, time to appropriately review the revised legislation ran out. Many lawmakers balked at the inability to see the final version of the legislative text, aside from the portions that were being leaked or circulated.
Earlier in the day, a rift was created surrounding the issue of future tax increases to assist in paying for the legislation. A few members stated they would not move forward with the bill unless the necessary funds appeared in the proposal as a defense against adding more debt to the deficit.
These requests came as a response to the Joint Committee on Taxation’s (JCT) official dynamic score of the proposed Senate tax plan, which is estimated to add $1.4 trillion to the deficit over the next 10 years—its 0.8 percent growth only paying for around three-tenths of the cost of the bill ($407 billion). An automatic future tax increase was proposed by Sen. Bob Corker as a solution to the debt problem, but the idea was swiftly rejected. GOP lawmakers contend that the bill will ultimately reduce the deficit by stimulating economic growth. Corker was the only Republican to vote against the bill, joining all 48 Democrats in opposition.
“While I support a number of the provisions included in this legislation and continue to believe it would have been fairly easy to alter the bill in a way that would have been more fiscally sound without harming the pro-growth policies, unfortunately, it is clear that the caucus is in a different place,” said Corker in a statement.
Republicans did settle on a few amendments, however. The corporate tax rate will remain at 20 percent, but the pass-through rate used by businesses on the individual side will be increased from 17.4 percent to 23 percent. The updated version will also feature less stringent rules for companies that decide to file as corporations following the tax overhaul. The Interest-Charge Domestic International Sales Corporation will be restored to present law. Repatriation will be increased from 7 percent to 14 percent. The individual alternative minimum tax exemption amounts and phase-out thresholds will be increased. In addition, the Senate Republicans won over Sen. Susan Collins by adding language to the bill that allows tax payers to write off up to $10,000 in property taxes paid to local and state governments.
Senators must now converge with House members to merge the two versions of the bill in a way that appeases the majority of voters. If they come to an agreement, the converged bill will make its way through both chambers before it lands on President Trump’s desk to be signed into law.
Stay tuned to RISMedia for more developments.
Liz Dominguez is RISMedia’s associate content editor. Email her your real estate news ideas at ldominguez@rismedia.com.
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