Daily Tax Update - December 20, 2017: Tax Reform Bill Passes Senate and House

Tax Reform Bill Passes Senate and House:  Early this morning, the Senate voted to pass the reconciliation bill, H.R. 1, by a vote of 51-48. All Republican members present (Senator McCain was absent) voted in favor of the bill, and all Democrats and independents voted against the bill. The bill encountered technical issues for violating the Byrd rule by including provisions that did not relate to federal revenue and spending. The Senate voted on the bill after removing these provisions. 

As a result of the changes, the bill needed to be voted on again by the House to ensure that both chambers passed an identical version of the bill. This afternoon, the House voted 224-201 to pass the tax reform bill as passed by the Senate. The bill now heads to President Trump’s desk for signature. The president has indicated that he may not sign the bill into law until next year because of the PAYGO budget rule. PAYGO is intended to prevent budget deficits by requiring decreases in revenue to be matched with cuts in mandatory spending. If Congress does not waive PAYGO, the bill would trigger automatic cuts to programs such as Medicare beginning in 2018. If the president does not sign the bill until 2018, PAYGO will not trigger spending cuts until 2019.

Tax Extenders Bill Introduced in Senate:  Today, Senate Finance Committee Chairman Orrin Hatch (R-UT) introduced a tax extenders bill which would retroactively extend many of the tax credits and deductions that expired at the end of 2016 and make them available for the 2017 and 2018 tax years. Included in the bill, among a large number of other extender provisions, are extensions for the deduction for mortgage insurance premiums and certain credits relating to renewable energy, alternative fuels, and nuclear energy.

EU Court Rules that German Anti-Abuse Provision Conflicts with EU Law:  Today, the Court of Justice of the European Union issued its judgment in the joined cases Deister Holding AG and Juhler Holding A/S v Bundeszentralamt für Steuern. The Court of Justice ruled that the German anti-abuse law which prevents relief from withholding tax on dividends paid by a German company to parent companies resident in another EU member state is too general, and therefore incompatible with EU law.