The Senate Finance Committee approved its tax reform plan Thursday night by a party line vote of 14-12.
The Committee wrapped up a four-day markup after defeating dozens of Democratic amendments. The plan, for which legislative language is still not available, would set a permanent 20 percent corporate rate beginning in 2019 and sunset many individual tax provisions in 2026. It would also give passthrough business owners a 17.4 percent deduction on their income.
A manager's amendment introduced by Committee chairman Sen. Orrin Hatch near the end of the hearing Thursday night included changes to the tax treatment of carried interest similar to a provision in the House tax bill, which would impose a three-year holding period for partnership interests received in connection with performing services to qualify for long-term capital gain tax rates. More changes to the plan will likely be offered when the plan is debated by the full Senate, including modifications to the tax treatment of passthrough businesses.
Democrats on the Committee during the markup focused on the addition of a provision to repeal the Affordable Care Act's individual mandate and on a distribution table (JCX-58-17, available below) from the Joint Committee on Taxation that shows lower-income individuals would begin seeing tax increases as early as 2021 under the bill.
Democratic amendments were primarily messaging tools. The committee rejected along party lines an amendment from ranking member Ron Wyden (D-Ore.) to make the corporate tax cuts temporary and the individual tax cuts permanent, reversing the structure of the current package.
Sens. Claire McCaskill (D-Mo.) and Ben Cardin (D-Md.) made an attempt late Thursday to force a rethink of the repeal of the state and local tax deduction called for in the Senate tax bill, but their amendments was also rejected.
Legislative text of the Committee bill is likely to be available after the Thanksgiving recess, when the Senate also plans to bring the measure to the floor for a vote.
If the Senate passes a bill, it will set up a series of potentially tough conference meetings with the House to hash out the differences and reach a final bill.