With much publicity, the Senate passed an amended version of its Finance Committee’s version of the Tax Cuts and Jobs Act over the weekend. Corporations now face a challenge: where to find the resources to react. Expect a scramble around year-end planning and preparing for provisions.
This edition of Tax Advisor Weekly highlights the notable corporate amendments since the Senate Finance Committee version was first released (previously summarized here); although the amendments are few in number, their impact may be significant.
Next step: The House-Senate Conference Committee is expected to begin its process of reconciling their respective bills this week. Republican Party leadership intends and appears to be on track to deliver a bill to the President for signature before year-end.
Our Key Take-Aways:
- Raise your expectations of passage.The Senate is the greater hurdle for tax reform, with a significantly lower percentage of Republican legislators than the House. Passage of the Senate bill with all but one Republican vote demonstrates impressive party unity and flexibility. Knowing the House has even greater room for flexibility with a higher percentage of Republicans, it’s hard to imagine irreconcilable differences. Further, many of the amendments show the Senate pushing its bill closer to the already-passed House version. Even before Conference Committee, the Senate is trying to find common ground. Since the House’s strong Republican majority allows for even greater flexibility, it’s hard to see irreconcilable differences scuttling the joint legislation.
- Look to the Senate bill as the road-map.Given the slim majority in the Senate, House Republicans will be reluctant to override the Senate bill. Republican leadership is highly motivated to pass successful legislation ahead of the upcoming midterm elections, so expect the House to coalesce around the Senate bill so as not to disrupt the delicately woven Republican coalition in the Senate.
- Accept that corporations will likely face divergent and complex rules…