GOP Tax Plan Continues Moving Forward

The tax reform package introduced by Republicans cleared its first major hurdle yesterday when the House passed its version of the legislation by a vote of 227-205, with all Democrats and 13 Republicans voting against the legislation.  Proponents of the tax plan are now focusing on the Senate, which is still fine tuning its bill.  A recent revision to the Senate plan, which would double the deduction teachers can take for buying supplies for their classrooms, pushes the two versions of the legislation even farther apart.


The changes to the Senate bill would allow teachers to deduct $500 from their taxable income for purchases they make out of pocket for their classrooms.  Current law allows individual teachers to take a $250 deduction for those purchases.  This new deduction, if included in the final bill, would take effect for income earned in 2018.  The House GOP tax bill, meanwhile, would scrap the deduction altogether.  This is just one of many changes recently made to the Senate proposal, including lower individual income tax rates and the repeal of the mandate for individuals to buy health insurance until 2025.  The Senate bill increases the child tax credit from $1,000 to $2,000.


The Senate Finance Committee also considered a couple of amendments that would also align more closely with the House-passed legislation but were ultimately not adopted.  The House version allows savings in 529 plans (up to $10,000 annually) to be used for private school tuition.  Two proposed amendments to the Senate bill, which don’t exactly mirror the House provision, would have provided some tax breaks for school choice.  One amendment stated that a charitable deduction would be allowed for certain qualified tuition and related expenses relating to qualified religious instruction.  The other would have added a K-12 education tax credit for corporate and individual contributions to state non-profit organizations who provide scholarships for children in low-income to middle class families.


The Senate Finance Committee approved its tax bill along party lines Thursdaynight.  Once a final bill is approved by the full Senate, the two houses will either go to conference on a compromise bill, or simply ping-pong bills back and forth until both chambers pass the same version of the bill.  The Senate plans to vote on its tax bill the week after Thanksgiving.  Legislators will have to work fast in December, considering other legislative priorities besides tax reform that need to be addressed early next month.  The current continuing resolution (CR) that keeps the government level-funded runs out on December 8th.  Congress needs to pass final legislation or another CR by that date or risk a government shutdown.  It’s likely that Congress will pass another short-term CR that will expire later in December or in January in order to provide lawmakers additional time to negotiate a spending deal.  Additional issues, including immigration reform and raising the debt ceiling are likely to get pulled into the debate as well, giving Congress very little time to complete some major pieces of legislation.


Resources: Andrew Ujifusa, “School Choice Would Get Boost From Proposed Amendments to Senate Tax Bill,” Education Week: Politics K-12, November 13, 2017. Andrew Ujifusa, “New Senate Tax Plan Doubles Teachers' Deduction for Buying Classroom Supplies,” Education Week: Politics K-12, November 15, 2017.


Author: SAS

About the Author

Steven Spillan is an associate with the Washington, DC law firm of Brustein & Manasevit, PLLC. Established in 1980, the Firm is nationally recognized for its federal education regulatory and legislative practice, providing legal advice regarding compliance with all major federal education programs as well as the federal grants management requirements, including the Education Department General Administrative Regulations (EDGAR). In addition, they work with agencies on federal spending flexibility, allowability, policies and procedures, audit defense and resolution and legislative updates. The Firm provides government relations services for the National Title I Association.