This weekend, the Senate approved legislation, S.1 that would make a variety of changes to the U.S. tax code by a vote of 51-49, with all but one Republican supporting the bill and all Democrats opposing it. Senate approval of S.1 follows House approval of their own tax reform legislation last month.
As approved by the Senate, the legislation would make changes to corporate and individual tax rates, calls for the elimination of a number of individual tax code provisions, scales down, rather than eliminates, the alternative minimum tax, proposes an increase in the child tax credit and the standard deduction, 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.
The Senate bill includes NTEU-supported language sponsored 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 was pleased to see the Senate bill includes this important language highlighting the need for Congress to provide the IRS with the necessary resources to implement any proposed changes to the tax code and to carry out their taxpayer service and enforcement mission.
Because the tax reform proposals approved by the House and Senate differ from each other, a conference committee comprised of members of the House and Senate tax writing committees and leadership will convene to reconcile differences between the two versions of the bill. Once conferees, or members of the conference committee reach agreement on a final tax reform proposal, that proposal will have to be approved without amendment by the House and Senate before going to the President for signature.
As the House and Senate convene a conference committee to work out a final agreement on tax reform legislation, NTEU will continue to monitor the bills and their impact on federal employees and will keep you apprised of any important developments. While NTEU does not directly take positions on matters of tax policy per se, we remain concerned about the impact of these measures, if enacted, on the nation’s debt levels that will spur action to cut federal programs that include federal employee benefit programs, Social Security, and Medicare.
Should you have any questions, or require additional information, please contact your chapter president.