Your feedback ensures we stay focused on the facts that matter to you most—take our survey.

Tax Cuts and Jobs Act of 2018

From Ballotpedia
Jump to: navigation, search
What is budget reconciliation?

Budget reconciliation is a legislative process used to expedite consideration of spending, tax, and debt limit bills. In the U.S. Senate, reconciliation bills are not subject to filibuster, and the scope of amendments and length of time for floor debate is limited. Reconciliation bills also require a simple majority to pass, as opposed to the three-fifths majority commonly needed. Click here to learn more about budget reconciliation in Congress.


The Tax Cuts and Jobs Act of 2018 was a budget reconciliation bill that reduced the corporate tax rate, increased the standard tax deduction, and altered deduction for interest on home mortgages and equity. President Donald Trump (R) signed the bill into law on December 22, 2017.

While signing the bill, Trump said, "This is the bill right here, we're very proud of it ... I consider this very much a bill for the middle class, and for jobs. Corporations are literally going wild for [t]his."[1]

Background

Budget reconciliation
Administrative State Icon Gold.png
Unpacking the reconciliation process
• How reconciliation works
• Why reconciliation is used
• History of use
• Analysis of use
• Limits on reconciliation
• The Byrd Rule
• Filibuster and reconciliation
• Vote-a-ramas
Click here for coverage of Trump's second term on Ballotpedia.
See also: Budget reconciliation in U.S. Congress

The Tax Cuts and Jobs Act of 2018, or H.R. 1, was introduced by Rep. Kevin Brady (R-Texas) on November 2, 2017. The reconciliation bill is formally titled, "An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018." The bill included provisions to reduce the corporate tax rate, increase the standard tax deduction, and alter deduction for interest on home mortgages and equity.

The House passed the Tax Cuts and Jobs Act on November 16, 2017, by a vote of 227-205. The Senate passed the tax bill on December 2, 2017, by a vote of 51-49. All members of the Democratic Caucus and Republican Sen. Bob Corker (R-Tenn.) voted against the bill. A conference committee worked out a final, identical bill, which was released on December 15, 2017, because there were differences between the House and Senate versions.[2][3][4]

The House passed the conference committee version of the Tax Cuts and Jobs Act on December 19, 2017, by a vote of 227-203. The Senate then passed the bill with minor changes made during debate on December 20, 2017, by a vote of 51-48. The House voted on the bill once again following those changes since both chambers needed to pass identical bills in order for a bill to go to the president's desk. The House passed the final version of the bill on December 20, 2017.[5][6]

Budget reconciliation process

Budget reconciliation is a legislative process created by the Congressional Budget and Impoundment Control Act of 1974. Under the act, reconciliation can be used on legislation that changes the federal debt limit, revenue, or spending. As it relates to spending, reconciliation can be used to consider changes in spending on entitlement programs with the exception of Social Security. Because appropriations under mandatory spending are typically codified, amendments to those laws are often required.

In the Senate, according to the Center on Budget and Policy Priorities (CBPP), "reconciliation bills aren’t subject to filibuster and the scope of amendments is limited."[7]

For reconciliation measures to be considered by Congress, both chambers must agree on a budget resolution. This resolution must include resolution instructions, which contain four elements:

  • the relevant committee(s) to which the instruction is directed,
  • the deadline by which committee compliance must be achieved,
  • the specific change to either revenues, spending, or the debt (in dollars), and
  • the time period over which those budgetary changes must be achieved.

Once both chambers agree on a budget resolution, committees have until their specified deadlines in the resolution guidelines to produce reconciliation measures. Once a committee develops reconciliation measures, the committee then votes on whether to report the resolution. Once a measure is reported to the chamber, and the measure passes, resolution of differences between the chambers is typically addressed in conference. The Senate, however, limits debate time on a conference budget resolution.[8][9]

Congress is limited to using reconciliation for only one bill for each of the fiscal changes provided for in the reconciliation instructions, that is, changes to revenues, spending, and the debt limit. A single bill may make changes to all three, or two of three, but Congress cannot consider multiple bills satisfying the same instruction in a budget resolution. Thus, "Congress may not consider multiple tax bills under reconciliation procedures, or a bill that includes revenue and outlays and then another tax bill under the same budget resolution."[8]

Timeline

The following timeline includes key dates in the bill's history:

  • December 22, 2017: President Donald Trump (R) signed H.R. 1 into law.[10]
  • December 20, 2017: The House agreed to the Senate changes of H.R. 1 with a vote of 224-201.[10]
  • December 20, 2017: The Senate voted to approve the conference bill by a vote of 51-48.[10]
  • December 19, 2017: The House voted to approve the conference bill by a vote of 227-203.[10]
  • December 6, 2017: The Senate voted on motion to go to conference by a vote of 51-47.[10]
  • December 4, 2017: The House voted on motion to go to conference by a vote of 222-192.[10]
  • December 2, 2017: H.R. 1 passed the Senate with a vote of 51-49. The bill passed with a simple majority vote by using a process known as reconciliation.[10]
  • November 16, 2017: H.R. 1 passed the House with a vote of 227-205.[10]
  • November 2, 2017: Rep. Kevin Brady (R) introduced H.R. 1 in the U.S. House of Representatives.[10]

Major provisions

See also: Federal policy on taxes, 2017-2018

The final conference version of H.R. 1—the Tax Cuts and Jobs Act includes the following provisions:[11][12]

  • Seven individual tax brackets of 10, 12, 22, 24, 32, 35, and 37 percent. The top rate would fall from the current 39.6 percent.
  • Eliminates the personal exemption but increases the standard deduction to nearly double its current level. It would go to $12,000 for an individual or $24,000 for a family.
  • Child tax credit doubles to $2,000 per child from $1,000. It would be refundable up to $1,400 and start to phase out at $400,000 in income. It would end after 2025.
  • Twenty percent deduction for pass-through businesses. It phases out the deduction at $315,000 of joint income.
  • Corporate tax rate set at 21 percent.
  • Eliminates the individual mandate that requires most Americans to buy health insurance or pay a penalty under the Affordable Care Act (ACA) in 2019.
  • Eliminates the corporate alternative minimum tax, and increases the exemption from the individual AMT.
  • Keeps the estate tax, but the exemption from it would be doubled.
  • Allows the deduction of up to $10,000 in state and local sales, income, or property taxes.
  • Keeps tax breaks for charitable contributions and retirement savings plans.
  • Opens the Arctic Wildlife Refuge to oil drilling.
  • Sets corporate repatriation rate at 8 percent on illiquid assets and 15.5 percent on cash.

See also

Reconciliation process and details:

Reconciliation origin, historical use, and analysis:


External links


Footnotes

  1. ↑ The Wall Street Journal, "Trump Signs Sweeping Tax Overhaul Into Law," December 22, 2017
  2. ↑ WaysandMeans.House.gov, "HR 1," accessed November 2, 2017
  3. ↑ Clerk.House.gov, "Final Vote Results For Roll Call 637," November 16, 2017
  4. ↑ Senate.gov, "On Passage of the Bill (H.R. 1 As Amended )," December 2, 2017
  5. ↑ Clerk.House.gov, "Final Vote Results For Roll Call 692," December 19, 2017
  6. ↑ United States House of Representatives, "Roll Call 669, H.R. 1," December 20, 2017
  7. ↑ Center on Budget and Policy Priorities, "Introduction to budget 'reconciliation'," November 9, 2016
  8. ↑ 8.0 8.1 American Action Forum, "Budget reconciliation: a primer," January 24, 2017
  9. ↑ Congressional Research Service, "The Budget Reconciliation Process: Timing of Legislative Action," February 23, 2016
  10. ↑ 10.0 10.1 10.2 10.3 10.4 10.5 10.6 10.7 10.8 Congress.gov, "H.R. 1 - An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018." accessed January 15, 2025
  11. ↑ CNBC, "GOP releases its final tax plan — here's what's in it," December 15, 2017
  12. ↑ The Wall Street Journal, "GOP Tax Plan Summary Released -- Here Are the Headlines," December 15, 2017
Retrieved from "https://ballotpedia.org/wiki/index.php?title=Tax_Cuts_and_Jobs_Act_of_2018&oldid=10213694"