Senate Approves Tax Reform Legislation

Seal of the United States Senate
Seal of the United States Senate

Yesterday, the Senate Committee on Finance approved a measure that would make a variety of changes to the U.S. tax code by a vote of 14-12, with Republicans supporting the bill and Democrats opposing it.

As approved out of committee, the Senate bill includes several changes from the original proposal that I informed you about last week. In particular, the Senate bill makes additional changes to corporate and individual tax rates, calls for the elimination of a number of individual tax code provisions, including the alternative minimum tax, proposes an increase to the standard deduction and to the child tax credit, extends the IRS free-file program and includes a repeal of the individual mandate in the 2010 health care law. Unlike the House bill which would gradually eliminate the estate tax and reduce the current seven individual tax rates to four, the Senate proposal would double the estate tax exemption threshold, and would retain the existing seven-bracket rate structure. However, both measures, if enacted, would dramatically increase the nation’s debt, requiring major cuts to core federal programs that include Social Security, Medicare, federal employee benefit programs, and others.

NTEU was pleased the revised Senate legislation includes NTEU-supported language offered by Senators Carper (D-DE) and Brown (D-OH) expressing the need to improve IRS customer service and protections for taxpayers by reinstating appropriate IRS funding levels. In particular, the language “expresses the sense of the Senate that politically motivated budget cuts are counterproductive to deficit reduction, diminish the IRS’s ability to adequately serve taxpayers and protect taxpayer information, and reduce the IRS’s ability to enforce the law.” NTEU appreciates Senators Carper and Brown for their leadership in including this important language highlighting the need for Congress to provide the IRS with the necessary resources to carry out their taxpayer service and enforcement mission.

The next steps for the Senate bill are still uncertain at this point. The bill could advance to the full Senate for a vote following the planned congressional Thanksgiving recess next week, or the House and Senate could convene a conference committee as soon as next week to work out differences between the House-passed bill and the Senate bill approved out of committee. Any such compromise reached by a conference committee would then be subject to separate votes by the full House and Senate.

As the House and Senate decide how to proceed with further consideration of their tax reform proposals, NTEU will continue to monitor the bills and their impact on federal employees, and will keep you apprised of any important developments.