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Treasury Secretary Says Tax Bill on Track for Completion Next Month

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11/10/2017 | 10:53pm CET
By Nick Timiraos and Richard Rubin 

WASHINGTON -- Treasury Secretary Steven Mnuchin said Friday that he expects the House and Senate to agree on a compromise tax bill that President Donald Trump could sign into law by the end of the year.

In an interview on Fox Business Network, Mr. Mnuchin played down differences between the two chambers' proposals.

"I'm very comfortable that we have the same objectives and we'll iron out the differences," he said. The Treasury secretary said he was "highly confident" the compromise legislation could be signed into law by Christmas.

Senate Republicans' proposal to overhaul the tax code, unveiled on Thursday, diverges in key ways from a plan that advanced through a House committee this week.

Senators would delay a corporate tax rate cut until 2019, forgo estate tax repeal and eliminate the entire state and local tax deduction. Compared with the House bill, those changes and others freed up hundreds of billions of dollars that enabled senators to avoid tough and politically painful choices.

Unlike the House bill, the Senate plan wouldn't repeal the deduction for medical expenses, a break that is crucial to nursing-home residents and taxpayers with significant out-of-pocket health care costs for chronic illnesses. The Senate plan also doesn't touch the deduction for student loan interest, which has become a rallying point for critics of the House plan. The Senate also preserved the mortgage interest deductions on loans up to $1 million and for second homes.

The division on the state and local deduction is driven by the differences in the composition of the House and Senate Republican caucuses. High-tax states have virtually no representation among Republican senators, but they are a powerful enough force in the House GOP to demand a deduction for property taxes of up to $10,000.

The bills also each propose starkly different systems for taxing U.S. companies' foreign income and foreign companies' U.S. operations.

Mr. Mnuchin said the two bills feature "some very small differences" that wouldn't ultimately prove insurmountable. Republicans, who control both houses of Congress, are determined to get a tax bill passed to notch an accomplishment they can tout during the 2018 midterm election campaign.

The legislative process faces other obstacles, including a requirement in the Senate that any tax overhaul not increase deficits beyond the first 10 years. Right now, neither bill appears to satisfy that rule. That will likely require Republicans to set some or many of the tax breaks to expire.

The House bill is set for a floor vote next week; the Senate is expected to vote after Thanksgiving.

Write to Nick Timiraos at [email protected] and Richard Rubin at [email protected]

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