House and Senate leaders were expected to release this week a merged tax bill that works out the differences in the versions previously passed by the House and Senate, but the latest reports are that final votes will be delayed until the week of December 18. Differences among Republicans have not all been resolved. A dispute about the estate tax was aired by 53 Republican House members, who issued a letter calling for the total repeal of the estate tax in the final tax legislation. The House bill included such a repeal; the Senate version doubles value of estates exempted from the tax to $22 million for couples but does not repeal the estate tax outright. President Trump has also called for ending the estate tax. The Senate reduction in the estate tax costs $83 billion over ten years; the House repeal costs $151 billion. Any additional revenue loss must be made up in some way so that the total cost of the tax legislation does not exceed $1.5 trillion, as called for in the initial budget instructions. (If the cost grows larger, the bill will need an unreachable 60 votes to pass in the Senate, instead of a simple majority.)

Other concerns about the bill remain, including objection to the size of the deficit, support for the slight improvements in the refundable portion of the Child Tax Credit in the Senate version (or making further improvements in it), and questions about whether the repeal of the Affordable Care Act’s individual mandate can be mitigated. Members of Congress from high-tax states remain unhappy about the loss of state and local tax deductions, but further changes in this provision may not be forthcoming.

Similar to the House and Senate versions, the negotiated bill is expected to give trillions of dollars in tax cuts, disproportionately to the wealthy and big corporations, and add nearly $1.5 trillion in debt over 10 years. While there will likely be some tax cuts for middle class families in the earlier years, many will actually see increases.

Added to the Senate version of the bill, the conference bill is expected to include a repeal of the individual mandate of the Affordable Care Act, which requires that all individuals obtain health insurance or pay a penalty. Senate leadership and President Trump made assurances that two other health-related bills would be passed before the end of the year in exchange for Sen. Susan Collins’ (R-ME) support of the tax bill with the individual mandate repeal included. One piece, known as the Alexander-Murray legislation, would fund the ACA’s cost sharing reduction subsidies for two years. Another bill, sponsored by Sen. Collins and Sen. Nelson (D-FL), would provide funding for two years for states to set up reinsurance programs that help pay for high-cost patients. However, many House Republicans are opposed to the passage of these bills. “That’s just not going to happen,” Rep. Tom Cole (R-OK) said last week, according to CQ. The nonpartisan Congressional Budget Office said the repeal of the individual mandate could result in up to 13 million more uninsured Americans and a 10 percent increase in average premiums. It also said that passage of the Alexander-Murray bill would not change those projections. The “assurances” provided to Senator Collins appear far less firm, and it is not likely that the bills she seeks can be voted on before the final tax vote. All this has put increasing pressure on her to oppose the tax bill.

Because the tax bills would add to the deficit, both would result in automatic cuts under the Statutory Pay-As-You-Go Act of 2010, known as PAYGO. The law specifies cuts to be made to all federal programs except those specifically exempted in the law. Congress has authority to waive the cuts and is expected to do so this time as well.

Advocates are fighting hard against these tax cuts, calling them a one-two-three punch inflicted on low- and middle-income Americans. First, people are hurt in the near-term by seeing their taxes go up from the loss of deductions or credits; the bills eliminate many deductions and credits low- and middle-income families rely on, including certain college deductions and credits, state and local income and sales tax deductions, and the Child Tax Credit for immigrant families. Next, larger deficits created by these cuts will be used as an excuse to cut domestic programs. House Speaker Paul Ryan (R-WI) and other GOP leaders have already stated that the deficit, which will increase by $1 – 2 trillion as a result of the tax bill, will be justification to cut programs and services Americans rely on, such as Medicaid, SNAP, SSI, education, housing, and others that help families afford basic living standards. These cuts will come on top of years of cuts sustained by some of these programs. Finally, some tax changes that could have been used to invest in real national priorities, such as using the money saved by reforming the mortgage interest deduction to increase affordable housing for low-income families, will instead be given to the rich and wealthy corporations.

For more information on the House tax cut bill, see the Nov. 3 edition of the Human Needs Report and this blog. For more information on the Senate tax cut bill, see the Nov. 13 edition of the Human Needs Report and this blog.

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