As lawmakers prepare for an expected House-Senate conference on the Tax Cuts and Jobs Act (HR 1), several differences between the two bills are getting attention. Both bills repeal the state and local tax deduction (SALT), but the Senate repeal is temporary. Also, lawmakers must reconcile the House’s permanent repeal of the AMT and the Senate’s temporary repeal. Negotiations appear to be continuing over the ultimate fate of that popular deduction and others.
Originally, the House GOP proposed to repeal the state and local tax deduction entirely. A carve-out was added for property taxes. Even with the carve-out, the GOP lost several votes from Republicans representing jurisdictions with high state and local taxes when HR 1 came to the House floor.
Also, the Senate GOP added a carve-out for property taxes to its bill. Taxpayers could deduct up to $10,000 in property taxes. However, state and local sales and income taxes would not be deductible. This proposal is similar to the one in the House bill. “I believe that the amendment that I added on property tax deductions improves the bill,” said Sen. Susan Collins, R-Maine.
Although the House and Senate bills both have the $10,000 carve out for property taxes, a significant difference must be addressed in conference. The House bill permanently repeals the state and local tax deduction. Again, repeal in the Senate bill is temporary.
Alternative Minimum Tax
Further, lawmakers must decide whether to make AMT repeal permanent or temporary. Again, the two bills take different approaches. The House bill repeals the AMT after 2017. The Senate bill keeps the AMT but increases the exemption amount. The Senate bill also keeps the corporate AMT, which the House bill repeals. House Majority Leader Kevin McCarthy, R-California, said that keeping the corporate AMT “would destroy research and development.”
GOP leaders predict that HR 1 will cut taxes for most taxpayers. “Middle-income taxpayers, an overwhelming majority of them, will get tax relief,” Senate Majority Leader Mitch McConnell, R-Kentucky, said on December 3. Democrats countered that the GOP rushed the bill through the Senate without adequate time to understand it. “The bill is 477 pages. There’s a lot of stuff in here that I don’t think anybody knows what it’s all about,” Sen. Angus King, I-Maine, who caucuses with Democrats, said.
By George L. Yaksick, Jr., Wolters Kluwer News Staff
Go to Source
Powered by WPeMatico