What You Need to Know About Tax Reform
Congress has continued to make dramatic progress in approving an historic tax reform, with the 
Senate now joining the House in having approved separate versions of tax reform legislation. The effort to enact a reform of U.S. tax law providing a more competitive tax system for business taxpayers and improved economic opportunities for individuals and families is now entering a critical final phase.
The Senate early on December 2 voted 51 to 49 to pass an amended version of the tax reform bill previously reported by the Senate Finance Committee. The Senate adopted several significant changes to the Finance Committee bill in order to secure sufficient votes to pass the legislation. Senator Bob Corker (R-TN) joined all 48 Senate Democrats in opposing the bill.
Changes to the Finance Committee bill that were adopted by the Senate include increasing the proposed 17.4 percent deduction for certain pass-through business income to 23 percent, and adding a $10,000 deduction for individual state and local property taxes. To offset part of the cost of these provisions and other revenue-losing changes, the Senate agreed to increase the tax rates for the mandatory repatriation toll tax to 14.49 percent for cash or cash-equivalents and 7.49 percent for illiquid assets (slightly higher levels than in the House-passed bill). In addition, the Senate agreed to maintain the current corporate alternative minimum tax (AMT) and to increase the individual AMT exemption amounts and phase-out thresholds in lieu of full repeal. The Senate also accepted other changes to the Finance Committee bill.
Although similar in overall structure, the amended Senate tax reform bill differs in key details from the ‘Tax Cuts and Jobs Act’ (HR 1) approved on November 16 by the House of Representatives. A House and Senate conference committee is expected to begin work next week on resolving the differences in the two versions of tax reform legislation.
