How Do Key Provisions Differ in the Senate and House Tax Bills?

http://cedam.info/2017/12/how-do-key-provisions-differ-in-the-senate-and-house-tax-bills/

The Senate tax bill passed in the early hours of Saturday morning with only one Republican, Senator Bob Corker (R-TN) voting against it. The bill now heads to conference committee where the House and Senate will try to reconcile the differences in their two tax reform plans. Once negotiations are finished a draft of the conference report must pass through each chamber before being signed by President Trump. While there are large differences between the two versions of the tax plan, amounting to hundreds of billions of dollars, Trump could see a draft as early as next week.

The following chart presents the differences on many key provisions in the Senate and House plans:

House Senate
Standard Deduction Doubled Doubled
Personal Exemptions Eliminated Eliminated
State and Local Tax Deduction Limited to $10,000 for property taxes Limited to $10,000 for property taxes
Child Tax Credit Increased to $1,600 Increased to $2,000 but the second $1,000 is nonrefundable
Mortgage Interest Deduction $500,000 cap Preserved at $1 million cap
Alternative Minimum Tax Repealed Preserved
Estate Tax Reduces estate and gift taxes by doubling the exemption and then ultimately fully repealing the estate tax Reduces estate tax by doubling the exemption
ACA Individual Mandate Repealed Repealed
Low Income Housing Tax Credits (LIHTC) Retain Retain
Private Activity Bonds (Including Multifamily Bonds) Repealed Retain
Historic Tax Credit Eliminated 20% HTC
Corporate Tax Rate Lowers from 35% to 20% Lowers from 35% to 20%
Johnson Amendment Repealed Retain

 

Both nonprofits and affordable housing organizations are adversely affected by the tax plans. Fewer people are expected to donate to nonprofits because the standard deduction is doubled and the estate tax is repealed (House) or has more exemptions (Senate).  The nonpartisan Tax Policy Center estimates that charities, including nonprofit arts organizations, could see a loss of up to $20 billion annually as a result of this tax policy change.

With the corporate tax rate significantly reduced, the value of Low Income Housing Tax Credits (LIHTC) will be much less. According to Diane Yentel, president of the National Low Income Housing Coalition, “The bill also triggers a 2010 law that almost immediately forces sequestration cuts on some mandatory spending, including a 6.6% cut to the vital national Housing Trust Fund.”

The GOP tax bills also increase the debt by at least $1 trillion — and 62% of the benefits of the bill go to the top 1% of earners. Republicans in Congress have said that they plan to tackle welfare reform, make cuts to entitlement programs and decrease federal spending to make up for the debt increase.

It’s not too late to make your voice heard. The conference committee must still reconcile the differences between the bills, and then the House and Senate must both vote on the final bill. Please continue to reach out to your Representative and Senators and urge them to defeat this tax plan and instead work on a bi-partisan bill.

Resources for Contacting Legislators

Contact information for your Representative and your Senators.

Talking points on how the House and Senate plans impact affordable housing development.

Information from the National Low Income Housing Coalition.

Information about the Historic Tax Credit.

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