Susan Walsh/AP images House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell
- Republicans in the House and Senate passed their respective tax reform bills at breakneck speed.
- Experts are starting to find errors and loopholes in the bills.
- Members of the House and Senate conference committee will need to solve these issues and write a compromise bill.
As Republicans hurtle toward making their massive tax bill into law, experts are starting to find a slew of errors they say are likely the result of a rushed process.
Republicans argued that the bill was the culmination of years of work. But the actual bills off that work moved through both chambers of Congress at legislative light speed.
The House passed its version of the Tax Cuts and Jobs Act just two weeks after rolling it out. The Senate got its version through in three weeks - with a week off for Thanksgiving making up one of those.
Given the breakneck speed of passage and last-minute dealmaking that went into passing the bills (the Senate was making handwritten changes to their bill hours before it passed), it's no surprise they have discovered complications in the immediate aftermath.
Perhaps the biggest of the errors came in the Senate bill, which at the last minute kept in the corporate alternative minimum tax (AMT). As was first noted by Richard Rubin at the Wall Street Journal, leaving the corporate AMT could have major consequences for businesses, such as effectively eliminating the benefit of the research and development tax credit.
The change was so sudden that experts say the Joint Committee on Taxation may have understated its potential impact. Lily Batchelder, a tax law professor at New York University and former National Economic Council deputy director, tweeted on Tuesday that any change to the corporate AMT would have massive revenue effects.
Batchelder said repealing the corporate AMT could cause a revenue shortfall of an additional $300 billion. That would force Republicans to find significantly more revenue in other places to fit their tax bill into a specific budget window - by taking away deductions or increasing rates.
That's not the only error
For instance, as Politico's Brian Faler noted, the TCJA would impose a new tax on university endowments but does not define an endowment. Universities with large financial holdings have multiple accounts to generate income, but it is not clear which of those would qualify toward the new tax.
Other issues with pass-through businesses and a one-time tax on foreign profits of multinational corporations also were noticed after the legislation's passage.
To solve the problems, Republicans are beginning the process of a conference committee. The committee will be made up of members of both chambers - mostly from the tax-writing House Ways and Means and Senate Finance committees - to hash out differences in the bills and work out the errors.
From there, the House and Senate would have to approve the compromise bill. It is unclear how quickly the conference bill would get a vote, but House Speaker Paul Ryan said Wednesday that the GOP is aiming to have a bill on President Donald Trump's desk by Christmas.