Paul Ryan, McConnell, and Trump are on a collision course over the competing GOP tax bills

Mcconnell trump ryanEvan Vucci/AP ImagesSenate Majority Leader Mitch McConnell, President Donald Trump, and House Speaker Paul Ryan
  • Both Senate and House Republicans have rolled out their versions of a tax reform bill, named the Tax Cuts and Jobs Act.
  • There are substantial differences between the two bills — and then there are President Donald Trump’s priorities to consider.
  • The gaps among the three GOP groups could become a serious headache for the tax bill.

Republicans in both the House and Senate took significant steps this week toward a goal of reforming the US tax code. But they also got closer to a potentially acrimonious fight over what their final plan will look like.

As Republicans race toward a self-suggested Christmas deadline to get a bill to President Donald Trump’s desk, the House and Senate versions of the legislation contain key differences. And many of Trump’s priorities for the tax plan seem to be missing in either one or both of the bills — especially the Senate’s.

While House and Senate Republicans and the White House collaborated on a unified framework for the tax overhaul in September, congressional dynamics and the pressure to secure a signature legislative achievement could make solving the differences an intense intraparty fight.

House v. Senate

After the release of the Senate’s version of the Tax Cuts and Jobs Act (TCJA) on Thursday, several significant policy differences emerged compared to the House version.

Both bills have the same goal: reducing corporate and individual taxes. But they go about it in vastly different ways.

Here’s a quick primer of the differences:

The Senate bill would maintain the current number of individual tax brackets — seven — but change the rates and income thresholds. The House bill would shrink the number of brackets to four.

The House bill would eliminate many personal deductions and tax credits for things like adoptions and medical expenses, while the Senate bill would keep those elements. The Senate would wait until 2019 to slash the corporate tax rate to 20% from the current 35%, while the House bill would do it next year.

The reason behind these policy differences: the politics of each chamber

House Republican leaders wrestled for weeks to come up with a compromise on the state and local tax (SALT) deduction to attempt win over members from areas where many constituents take the deduction in large amounts — like New York, New Jersey, California, and parts of Illinois.

Senate Republicans don’t have members in any of those four states. So they would rather take the massive amount of revenue from its total repeal to help fit it into a tight budget window.

AshLee Strong, a spokesperson for House Speaker Paul Ryan, told Business Insider that the two chambers will work out the differences in a conference committee.

“The House and the Senate have each produced bills within the joint framework we released with the White House,” Strong said in an email. “After both chambers move its bill through the committee and then vote on the floor, we will go to conference to reconcile the differences.”

Trump vs. Congress

But Trump could add another wrinkle into the fight, based on a review of what he has promised and prioritised as part of tax legislation.

Trump is likely to have bigger qualms with the Senate version of the bill — particularly the proposed delay of the massive corporate tax cut. Trump has already privately expressed dismay about the corporate rate not falling further, to the 15% level he promised during the presidential campaign.

And neither the Senate nor the House bill includes the proposed repeal of the Affordable Care Act’s individual mandate, something that Trump tweeted should before the House bill was released.

The president has a volatile history of turning on a dime on legislation. For example, he called the House bill to repeal and replace Obamacare “mean” only weeks after he openly celebrated its passage with a White House victory lap.

Working it all out

Even with the differences, GOP leaders have insisted that the tax reform bill will make it to Trump’s desk by the end of 2017.

The aggressive timeline also introduces another complication, however, in the form of the government funding bill. Congress needs to pass funding legislation by December 8 to avoid a partial shutdown of the federal government, and so far there’s been little progress.

Democrats are fighting to include a fix for the Deferred Action for Childhood Arrivals, or DACA, program in the must-pass legislation. Trump has pushed to include funding for a wall along the US southern border.

Issac Boltansky, an analyst at research firm Compass Point, wrote Friday that with all of the moving parts, GOP leadership will have its hands full to keep the tax bill moving.

“It appears that GOP leaders in both chambers are focused intently on progressing to the conference committee, which will likely resemble the final scene in ‘Animal House’ as leadership insists, ‘Remain Calm … All is well,’ while bedlam ensues,” Boltansky said.

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