- Republican released their long awaited tax reform bill, the Tax Cuts and Jobs Act, on Thursday. Economists and analysts are almost uniformly convinced the bill will substantially change over the next few weeks. Issues like the state and local tax deduction, the home-interest mortgage, and more remain in flux.
House Republicans released their long-awaited tax reform bill on Thursday – a massive, 429-page document chock full of proposed changes to the tax code. But those changes could be just the beginning of the party’s long process to pass a bill that satisfies as many interested parties as possible.
“No need to take a deep dive into the tax plan unveiled yesterday – it’s just the start of a negotiating process, with the Senate yet to weigh in with many changes: the estate tax, the treatment of debt, the state and local tax break, etc,” said Greg Valliere, the chief strategist at Horizon Investments. “No need to memorize the House proposal.”
Issac Boltansky, an analyst at the research firm Compass Point, said “our sense is that the GOP’s package as currently written will need to be altered considerably in the weeks ahead.”
And Seth Carpenter, an economist at UBS expressed similar skepticism that the bill will look at all similar in the coming days.
“To our read, the release confirms our view that tax reform is far from being a done deal,” Carpenter wrote Friday. “The bill contains several specifics that we believe will prove sticking points, which increase the difficulty of finding the votes to support the plan in both the House and the Senate.”
Even Republican lawmakers are admitting that the bill will need some changes before enough members get on board with it.
“The Tax Cuts and Jobs Act released today by the House Ways and Means Committee is a starting point that needs to be improved to ensure that New Yorkers receive the tax relief they deserve,” Rep. Elise Stefanik of New York said in a statement Thursday.
Rep. Mark Meadows, head of the conservative House Freedom Caucus, also said certain details in the plan would need to be worked out.
“I believe we’ll get there, and I’ll be optimistic that the few remaining issues will get addressed,” Meadows told reporters.
Even the bill’s author, Rep. Kevin Brady, said that the bill will require changes and plans to introduce a few in an amendment on Monday.
“At the start of our markup on Monday, I will also offer an additional amendment making more substantive improvements to the bill,” Brady said Friday.
A few major aspects of the bill could significantly change – the most significant being the state and local tax (SALT) deduction. The deduction benefits many people in states with high taxes like California, New York, and New Jersey.
Lawmakers representing those states have already expressed dissatisfaction about a compromise in the current legislation, and Republicans will likely need to tweak it to earn support of enough members from those states. Rep. Lee Zeldin of New York said he would not vote for the bill “in its current form” because of the proposed changes to the SALT deduction.
“We need to fix this State and Local Tax deduction issue,” Zeldin said. “If I’m not fighting for New Yorkers, I can’t expect anyone else from another state to do it for me.”
The thorny issues ahead mean Thursday’s fanfare was more of a starting gun than final buzzer, said Morgan Stanley’s US public policy team, led by analyst Michael Zezas.
“We will learn more information next week as lobbying ramps up and the House bill is marked up. In addition, the Senate plans to release their draft bill next week and may make different choices than the House to fit their own political calculus,” Zezas wrote Friday. “Thus while Republican leaders have an ambitious timeline, this process is only just beginning.”