Nothing has really passed until these get worked out in conference committee

Here are the major differences between the House and Senate tax cut bills

By —— Bio and Archives--December 4, 2017

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Here are the major differences between the House and Senate tax cut bills
We’re not quite there yet. The Senate vote late Friday on the tax reform bill was necessary but not sufficient. There still isn’t a tax bill for President Trump to sign.

I realize many of you know this either because you studied it in school or - even better - because you watched Schoolhouse Rock. But let’s just hit the highlights so we’re all on the same page:

Before a bill can become a law, it has to be passed in identical form by both the House and the Senate and then signed by the president. The House and Senate have each passed their own respective tax cut bills, but they are not identical, so the differences need to get ironed out in a House-Senate Conference Committee. Once the Conference Report is complete, both houses have to vote to approve the Conference Report and only after that has happened can President Trump sign the bill into law.

Now I am cheered by the fact that we’ve gotten to this point. We didn’t even get this far with ObamaCare repeal - at least not yet. But we are not guaranteed success here. Getting the two bills to the point where they could pass their respective chambers took a lot of horse-trading and last-minute changes to satisfy the final holdouts. The Senate had to add provisions to win the votes of Susan Collins, Jeff Flake and Ron Johnson. The House Freedom Caucus might not like those provisions. It remains a dicey proposition whether the Conference Committee can come up with a compromise that won’t cost them the support of those waverers.

Let’s take a look at the major differences between the two bills, starting with the impact on tax brackets. As of now there are seven different federal tax brackets, which are 10 percent, 15 percent, 25 percent, 28 percent, 33 percent, 35 percent and 39.6 percent. Remember, marginal tax rate means the tax rate on the next dollar of income. So if Congress decides the rate is 10 percent up to $50,000 of income and 20 percent after that, you pay 10 percent of the first $50,000 you make and you only start paying 20 percent on dollar number 50,001.

(Also, let’s start with something the bills have in common: Both double the standard deduction from $6,000 to $12,000 for individuals, and from $12,000 to $24,000 for married couples.)

That said, here is how the respective bills would change the tax brackets:


  • 10 percent on income up to $9,525 for individuals; up to $19,050 for married couples filing jointly
  • 12 percent on income from $9,525 to $38,700; from $19,050 to $77,400 for couples
  • 22 percent on income from $38,700 to $70,000; from $77,400 to $140,000 for couples
  • 24 percent on income from $70,000 to $160,000; from $140,000 to $320,000 for couples
  • 32 percent on income from $160,000 to $200,000; from $320,000 to $400,000 for couples
  • 35 percent on income from $200,000 to $500,000; from $400,000 to $1 million for couples
  • 38.5 percent on income from $500,000; from $1 million for couples


  • 12 percent on income starting at $12,000 and up to $45,000 for individuals; starting at $24,000 up to $90,000 for married couples
  • 25 percent on income from $45,000 to $200,000 for individuals; from $90,000 to $260,000 for couples
  • 35 percent on income from $200,000 to $500,000 for individuals; from $260,000 to $1 million for married couples
  • 39.6 percent on income over $500,000 for individuals; over $1 million for married couples

The House bill has fewer rates, which makes it a slightly flatter code, but the Senate bill has more lower rates. Overall more people would pay less under the Senate bill. The best way to marry the two would be to keep four rates like the House bill but make them lower like in the Senate bill.

On the corporate tax rate, both bill reduce the corporate rate to 20 percent, which is an excellent change. The House bill lowers the rate on pass-through businesses to 25 percent while the Senate bill lowers it to 23. (These are corporations whose owners pay tax on the corporate income at the individual rate.)  They might just split the difference and make it 24 percent, but they could risk losing the votes of Senators Johnson and Daines if they do that.

On the Alternative Minimum Tax, the House bill eliminates it entirely. The Senate bill reduces the number of people who pay it. The AMT is terrible and should be completely eliminated.

On the estate tax, both bills increase the exemption to $11 million worth of estate value (or $22 million for a surviving spouse), but the House bill repeals the tax entirely starting in 2023, whereas the Senate bill leaves it in place with the new larger exemption. Taxing estates is terrible policy. You’re taxing what’s left of income that’s already been taxed. The House bill should win out here and the tax should be eliminated - the sooner the better.

Continued below...

On the child tax credit, which now stands at $1,000, the House bill increases the credit to $1,600 and adds $300 per child per family. The Senate bill increases it to $2,000. I’m not the biggest fan of this credit so I’ll be honest and tell you I don’t really care how they resolve it.

On mortgage interest, the House bill limits the mortgage interest deduction to the first $500,000 of the loan. The Senate bill limits it to the first $1 million of the loan. Cowards. The mortgage interest deduction is terrible policy and should be eliminated completely, but no politician wants to be accused of not helping homeowners. They would have been better off cutting the deduction to zero and increasing the standard deduction a little more. But it will probably end up at the $1 million limit because that was one of Susan Collins’s demands.

On medical expenses, the House eliminates the deduction for those expenses. The Senate bill keeps it, and that too was a Susan Collins demand so my guess is that it stays in.

On ANWR drilling, the Senate bill opens up the ANWR to drilling. The House does not. This is good policy, even if they did only put it in to buy Lisa Murkowski’s vote. The House should agree to add the provision.

Finally, on ObamaCare, the Senate bill eliminates the individual mandate, while the House leaves it in place. This should be a no-brainer. The House should agree to add the elimination of the individual mandate.

Those are my takes on what should happen. I’m sure some of the deals that get made will not be to my liking - or to yours - but for the most part the provisions of both bills amount to massive improvement over the status quo. If they don’t stray too far from that, we should have a bill that’s very much worth President Trump’s signature, and represents a boon to the prosperity of the American people.

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Dan Calabrese -- Bio and Archives | Comments

Dan Calabrese’s column is distributed by HermanCain.com, which can be found at HermanCain

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