Tax Reform Developments Continue

Back to Updates (Home)


On July 27, the Trump administration and Republican congressional leaders issued a joint statement outlining broad principles to be incorporated in tax reform legislation they hope to move forward this fall. The statement highlighted tax relief for families and a lower tax rate for businesses, especially small businesses. Notably, the statement announced that the controversial border adjustment tax proposal has been dropped from consideration.


In the wee hours of the morning of July 28, the Republican effort to advance an Affordable Care Act (ACA) repeal measure to a Senate/House conference was defeated when Senator John McCain (R-AZ) and two other GOP senators voted against it. Some observers consider this to be the end of the effort to repeal "Obamacare," but the White House and several lawmakers have indicated they intend to continue. Other lawmakers are attempting to fashion a bipartisan compromise to address ACA problems without repealing the law. All ACA taxes continue to be part of the tax code at this time.


On July 31, Treasury Secretary Steven Mnuchin and White House Director of Legislative Affairs Marc Short both addressed the timeline for tax reform in speeches at a Washington, DC event. Short predicted that the House and Senate will vote in October and November, respectively, and the tax overhaul will be finalized before Thanksgiving. Mnuchin stated "come September 1, we're going to see these bills go through the legislative process."


All but three of the 48 Democratic Senators signed an August 1 letter to President Trump, Senator Mitch McConnell (R-KY, Majority Leader), and Senator Orrin Hatch (R-UT, Finance Committee chair) outlining three conditions under which Democrats will work with Republicans on tax reform:


  1. no tax cuts for the top 1 percent,
  2. no debt-financed tax cuts for individuals and corporations, and
  3. the legislation must utilize regular order, not the reconciliation process, in the Senate.


McConnell rejected the conditions, saying reconciliation was necessary because the letter showed that Democrats are "not interested in addressing" principles necessary for growth in the country. Regular order requires 60 votes to pass legislation, while only 51 votes (including Vice President Mike Pence's tie-breaker if necessary) are needed under reconciliation. There are 52 GOP senators.


Back to Updates (Home)