(Bloomberg) -- House and Senate lawmakers plan to begin working this week on compromise tax-overhaul legislation -- a key step in their drive to send a package of tax cuts for corporations and individuals to President Donald Trump by the end of the year. Here are the latest developments, updated throughout the day:
Senator Rob Portman: ‘I’m Not a Big AMT Fan’ (2:10 p.m.)
Two influential GOP senators -- Senator Rob Portman of Ohio, one of the chamber’s main tax writers, along with Senator Orrin Hatch, chairman of the tax-writing Senate Finance Committee -- said their preference is to repeal the corporate AMT.
“I’m not a big AMT fan,” said Portman, who also wants to repeal the individual AMT. “I’d like to end up there, but we’ve got to do the back and forth with the House.”
Hatch added: “I’d like to get rid of it.”
In a last-minute change, the Senate bill preserved the corporate AMT at its current 20 percent rate, along with a modified version of the individual AMT. The House legislation repeals both levies.
Another GOP member, Senator David Perdue of Georgia, said he too would like to see the AMT eliminated for corporations and individuals by the House-Senate conference committee that’s expected to begin working out compromise legislation this week.
“We couldn’t go all the way because we needed the revenue,” Perdue said, referring to the corporate AMT. Repealing it would have cost about $40 billion over a decade -- which shows just how close tax writers were to hitting the $1.5 trillion deficit limit set by their budget resolution.
Perdue added that his top priority is setting the corporate rate at 20 percent.
President Donald Trump endorsed the work of the conference committee early Tuesday afternoon, calling the panel a “mixer,” where lawmakers will pick the good things and get rid of the things they don’t like.
The result will be “something that is perfecto,” Trump said.
So far, opinion polls suggest a majority of voters aren’t happy with what they’ve seen. Fifty-three percent of U.S. voters disapprove of the Republican overhaul plan, and 64 percent say it favors the wealthy, according to a Quinnipiac University poll released Tuesday. The poll was conducted from Nov. 29 to Dec. 4. -- Steven T. Dennis, Kaustuv Basu and Jennifer Epstein
Brady Says Ending Corporate AMT is ‘Priority’ (11:23 a.m.)
House Ways and Means Chairman Kevin Brady, who’s overseeing the House-Senate conference committee for tax negotiations, said repealing the corporate alternative minimum tax is “one of the priorities” for the conference.
Senator John Thune, the chamber’s third-ranking Republican leader, said House and Senate representatives may meet Tuesday to discuss the issue. “There’s a high level of interest” in minimizing the measure’s impact, said Thune, of South Dakota.
House lawmakers have concerns about the Senate’s last-minute change to preserve the corporate AMT at 20 percent, Brady said Tuesday. The move would “undermine the pro-growth provisions in that code,” he said. “This is one of those issues we’re going to have to reconcile with the Senate.”
Preserving the corporate AMT would result in higher-than-intended taxes for technology firms and other corporations, tax experts say, and could imperil GOP promises of business growth and more hiring.
Under current law, the corporate AMT serves as a kind of insurance policy designed to prevent companies from using various breaks to pay too little tax. Currently, companies must calculate their potential tax liability under the regular corporate income tax or the AMT, and pay whichever is higher. But because the Senate bill would also cut the regular corporate income tax rate to the same 20 percent level as the AMT, many proposed deductions and credits would lose their effect.
Also, the repeal of the individual mandate requirement that’s part of the 2010 Affordable Care Act -- a feature of the Senate bill, but not the House legislation -- is still under discussion, but is likely to have strong support among House Republicans, Brady said.
Other negotiations will center on the temporary nature of the individual tax cuts in the Senate plan, with Brady acknowledging “we can’t achieve permanency in everything.”
The House and Senate also have different plans for pass-through businesses. The final solution will probably be a blend of the chambers’ provisions, according to Brady.
The House and Senate do agree when it comes to repealing individuals’ state and local tax deductions -- both would preserve only a property-tax deduction capped at $10,000. Brady said lawmakers are examining ways to make the legislation more favorable to high-tax states, but said he won’t know how they address it until the talks are really under way.
The conference committee will meet after the Senate appoints its members sometime later this week. But there will already have been plenty of talks before that formal meeting, according to Brady.
“We’ve already begun the discussions,” Brady said. “A lot of informal discussions are going on.” -- Laura Litvan, Laura Davison and Steven T. Dennis
What to Watch on Tuesday:
- President Donald Trump is scheduled to meet with small business owners in the afternoon.
- House Ways and Means Chairman Kevin Brady will hold his usual press briefing at 4 p.m.
Here’s What Happened on Monday:
- House Speaker Paul Ryan named nine Republican lawmakers to be a part of the conference committee responsible for negotiating a final tax bill with GOP senators.
- Senate Majority Whip John Cornyn said the Senate would take “a couple of days” to appoint its members to the conference committee.
- The Senate bill’s delay of the 20 percent corporate rate until 2019 is “one of the things I think is worth fighting it out over,” Representative Dave Brat of Virginia, a conservative House member, said during a Bloomberg Television interview.
- The Tax Policy Center released a study showing that under the Senate tax plan, 7 percent of taxpayers would pay more tax in 2019, 10 percent in 2025, and 48 percent in 2027, compared to current law. On average in 2027, taxes would change little for lower- and middle-income groups and decrease for higher-income groups.
©2017 Bloomberg L.P.
With assistance from Alexis Leondis