Congress Sets Stage for Tax Reform with Budget Resolution Package
On October 26, 2017, the House passed the Senate version of the FY18 budget resolution by a close vote of 216-212.
The budget resolution allows Republicans to move their tax plan forward.
A group of Republican representatives from high tax states like New York and New Jersey voted against the measure based on the current tax plan’s proposal to eliminate the state and local tax break. The proposal to eliminate the tax break means that the state and local tax deduction would be eliminated in tax reform. Plans to negotiate these differences were postponed once Republican leadership was assured they had enough votes to pass the resolution.
U.S. Representatives Rodney Frelinhguysen (D-11) was the only Republican and House member from New Jersey to vote for the budget resolution.
The budget resolution paves the way for tax reform legislation to be accomplished through reconciliation. Reconciliation allows the Senate to pass legislation with 50 votes. The budget resolution also passed narrowly in the Senate (51-49.)
A budget resolution is nonbinding and is not signed by the president. But a budget resolution is a necessary step that Republicans must take if they hope to enact tax reform legislation with a simple majority.
- While the original House budget resolution had called for deficit-neutral tax reform legislation, the Senate version allows for tax cuts that would increase the deficit by $1.5 trillion over the next ten years.
- The resolution also proposes unspecified cuts to safety net programs, but it does not provide reconciliation instructions to require these cuts.
- Democrats warn that increasing the deficit in this way will lead to deep spending cuts to important domestic programs, including affordable housing and community development programs.
The budget resolution also sets spending limits for FY18, but these figures carry little political weight since the budget resolution is non-binding and any final appropriations bill needs 60 votes to be enacted. Congress must pass another Continuing Resolution (CR) or enact its final spending bills when the current CR expires on December 8, 2017.
House Ways and Means Chairman Kevin Brady (R-TX-8) is expected to release the text of his committee’s tax reform bill on November 1, 2017 followed by a markup in the committee the week of November 6, 2017 and a vote on the House floor the week of November 13. 2017.
The Senate is expected to follow closely behind the House, with a markup of a tax reform bill in the Senate Finance Committee the week of November 13, 2017.
The National Low Income Housing Coalition (NLIHC), the ACTION Campaign and other national leaders call on Congress to lift the spending caps for defense and domestic programs equally and to fully fund U.S. Dept. of Housing and Urban Development (HUD) affordable housing programs.
The next few weeks will be critical for Low-Income Housing Tax Credit (Housing Credit) to make the case for retaining and strengthening the Housing Credit through tax reform.
Last month, the ACTION Campaign sent a letter to Congress and the Administration on behalf of 2,150 organizations, including Monarch Housing Association and 39 other New Jersey organizations, thanking Republican leadership for recognizing the value of the Housing Credit in their tax reform blueprint, and urging lawmakers to protect and modernize our affordable housing delivery system during tax reform.