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The Woodlands' Kevin Brady to join final conference committee on GOP tax cuts

Houston Chronicle

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Washington, December 5, 2017 | comments

by Kevin Diaz,

Texas Republican Kevin Brady was appointed Monday to chair to a key panel to hash out differences between House and Senate versions of the GOP tax bill likely headed for President Donald Trump's signature by the end of the year.

Although both the House and Senate have now passed major bills focused on reducing the tax burden on corporations and wealthy individuals, the two versions differ on important details, including how long promised middle-class and individual tax breaks would stay in effect.

The final product, bitterly opposed by Democrats, has been hailed by Republicans as a historic victory and the signature achievement of Trump's first year in office.

Brady, as chairman of the tax writing Ways and Means Committee, was the GOP point man on the House version of the bill. Congressional aides said Monday he was expected to help form the House delegation that will negotiate with the Senate, which passed its own bill early Saturday morning by a vote of 51-49.

Brady, of The Woodlands, called the Senate passage a "major step forward for tax reform and the American people."

But, he added, there's more work to be done.

"Now it's time to take the best of both the House and Senate bills, make them even stronger in a conference committee, and finalize one piece of legislation that will dramatically improve the lives of Americans for generations to come," he said. "This is our once-in-a-lifetime opportunity to deliver on our tax reform promise. I'm excited to work with my colleagues in the House and Senate on a plan we can send to President Trump this year."

Congressional aides have said they expect the conference report to be concluded by the end of the week, setting up another round of votes in the House and the Senate, which each need to pass the final bill.

Along the way, they will have to reconcile some substantial differences, though GOP leaders have said they don't consider any of them insurmountable.

For example, the Senate bill sunsets tax breaks for individuals in 2025. Brady's House bill makes its individual tax cuts permanent. The corporate rate, meanwhile, would remain permanent in both bills.

The Senate bill also maintains the current mortgage interest deduction of $1 million. The House bill cut it in half to loans of up to $500,000.

Both bills lower tax rates across the board, while taking away many popular personal exemptions and deductions for state and local sales taxes. But in a significant compromise, both chambers would allow a deduction for up to $10,000 in property taxes.

This is important to Republicans from high tax states such as New Jersey, New York and California. On the other hand, many conservatives from lower-tax southern states support removing the deduction, which they say subsidizes the local taxes of high tax states.

Another significant difference is on the corporate side of the tax code. The Senate bill enacts a new 20 percent corporate rate – down from 35 percent – in 2019. The House bill enacts the 20 percent corporate rate in 2018.

Complicating the negotiations on corporate taxes has been Trump's suggestion that the rate could be set a little higher, at 22 percent.

Another potential sticking point is how the two tax bills structure taxes for so-called pass-through businesses, whose owners generally pay taxes as individuals.

For individuals, the Senate bill would repeal Obamacare's individual mandate requiring virtually everyone to buy health insurance or pay a tax. The House bill does not include this provision.

For the super-wealthy, the House bill repeals the estate tax by 2024. The Senate bill doubles the exemption on the estate tax, allowing tax-free inheritances of up to $11 million.

For the merely well-off, the House bill would repeal the alternative minimum tax. The Senate bill kept it.

Democrats have maintained a unified front against the tax cuts, which they call a deficit-funded giveaway to the rich. Republicans argue that the benefits will accrue to all income levels, if not directly through lower taxes, than through the spark to the economy that they say will largely or entirely offset lost revenues.

That has been Brady's contention. In any case, Democrats have been largely written out of the process, with Republicans choosing to pass the bill under a special fiscal provision that gets around a possible Senate filibuster.

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