The $1.4 trillion tax-overhaul bill is set for a vote in both chambers this week, but the 500-plus-page bill has been hastily written to meet tight legislative deadlines—and if history is any guide, that means it could be loaded with drafting errors.
That’s where the next big piece of legislation to emerge from tax writers comes in: an early 2018 technical-corrections bill to fix language in the tax measure, and it’s shaping up to be nearly as expansive.
“I think it will be significant, and that’s just a reflection of the scope and complexity of the bill, but I think it’s also kind of the expedited process, and the fact that we’re seeing significant changes at the end,” said Marc Gerson, a former tax counsel to the Ways and Means Committee who is now at Miller & Chevalier.
The conference committee tasked with resolving the House- and Senate-passed versions of the tax bill signed off on the final version Friday, setting up votes in both chambers early next week. But unlike the tax bill, which the Senate is advancing under reconciliation rules that require a simple majority, the GOP may need help from the other side of the aisle to move a corrections bill. The question is, what will Democrats want for their help, if they’re even interested at all?
“I think the question is going to be, what’s the appetite of Democrats to participate in a technical-corrections process?” said Jon Traub, managing principal at Deloitte and a former staff member on the tax-writing House Ways and Means Committee. “They would point out that Republicans were unwilling to help make fixes to make the [Affordable Care Act] work, and Democrats might respond similarly here.”
As lawmakers filed out of the sole public conference-committee meeting Wednesday—a largely pro forma meeting, as Republicans hashed out a final version behind closed doors—Senate Finance Committee ranking member Ron Wyden railed against the notion that the GOP’s hasty bill drafting would lead to a big set of corrections.
“Here, they’re just assuming before the bill has even been debated on floor of the Senate, that because they have moved in such a hasty kind of fashion that they’re going to be digging out for days trying to figure out what they actually did,” Wyden said.
But importantly, neither Wyden nor House Ways and Means Committee ranking member Richard Neal explicitly said they would oppose a technical-corrections bill, leaving open the possibility of an early-year dealmaking frenzy, or a game of chicken as two parties blame the other for potential economic harm caused by failing to correct errors in the tax bill.
There’s no set deadline for a technical-corrections bill. Once Congress passes a corrections bill, the measure will be retroactive to when the original tax bill passed. But there will be pressure to pass a measure soon once taxpayers start to apply the changes and find hiccups in the language.
“Tax reform has a lot of technical issues in it, I would anticipate next year after feedback from the changes, we’ll see technical-corrections issues arise in a normal fashion,” House Ways and Means Chairman Kevin Brady told reporters.
Gerson said, at a minimum, tax writers could introduce a corrections bill soon so the public can get a chance to look at the upcoming changes and adjust their tax planning accordingly.
There are two legislative avenues to fixing problems with the bill, but both have limitations. First would be a traditional technical-corrections measure, slight edits to the language of the bill with no substantial modifications affecting its budget score. But the GOP could not advance that with only a simple majority in the Senate using reconciliation because the Byrd Rule requires that provisions in reconciliation bills affect the budget, Traub said.
“A technical-corrections bill shouldn’t raise revenue, it’s literally conforming the statute to what was intended, [fixing] missing cross references, changing negatives to positives,” Traub said.
They’ll need a few Democrats to advance that one.
A technical-corrections bill must also be signed off by the majority and minority of each tax-writing committee, as well as the Treasury Department and Internal Revenue Service. And in theory, any one of those could veto the process, Traub said.
Because the Byrd Rule requires that provisions in reconciliation bills affect revenue, simple text edits may not pass, but other things, such as eliminating unintended tax loopholes, potentially raising revenue, may get put into a separate bill. To do that, Congress would need to pass a fiscal 2019 budget resolution with instructions to craft a tax bill that made the necessary changes. They could then advance that tax measure in the Senate with 50 votes, using reconciliation.
If Congress fails to advance a bill fixing language in the tax bill, taxpayers could be relying on the administration to help smooth over the upcoming tax year, analysts said.
“I assume that IRS and Treasury will use the fullest extent of their regulatory authority to help with implementation issues,” Traub said.
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