House GOP moving full speed to get tax reform done by year-end

Key Points
  • House Republicans plan to vote on their tax reform bill on Thursday.
  • The House and Senate aim to pass separate bills before reconciling them, House Speaker Paul Ryan says.
Paul Ryan: Tax bill differences to be resolved in conference

House Republicans will vote on their tax reform bill on Thursday, aiming to take the most concrete step yet toward overhauling the American tax system.

House Majority Leader Kevin McCarthy, R-Calif., confirmed the plan to reporters on Tuesday. GOP leaders believe they can pass the bill this week, despite lingering resistance from some Republicans.

President Donald Trump plans to go to Capitol Hill on Thursday to make the case for tax cuts before the vote.

The GOP aims to pass a plan to chop tax rates for businesses and individuals by the end of the year to fulfill a key campaign promise. Lawmakers argue that changing the tax code will spark economic growth and boost job creation and wages.

This week, the Senate is marking up, or debating and amending, its version. The chamber wants to approve the bill after Thanksgiving.

House Speaker Paul Ryan on Tuesday described the current plans as a "work in progress." He said he expects the two chambers to pass separate legislation before going to a conference committee to craft a joint plan.

In an interview with CNBC on Tuesday, McCarthy contended that the House and Senate can quickly reconcile the differences and get a final bill to Trump's desk by the end of the year.

"I do not think it will take long until we come back with that final version," the California Republican said.

Rep. Kevin McCarthy: We should have a tax bill on president's desk in December

Key sticking points in making the final legislation include the treatment of state and local tax deductions and raising enough revenue to make up for the tax cuts.

The Senate bill currently calls for eliminating all state and local tax deductions, which could create political trouble for Republican House members in high-tax blue states like New York, California and New Jersey. The House bill also changes those popular provisions, but leaves a deduction on up to $10,000 in property taxes in place.

McCarthy told CNBC that he does not believe the Senate bill could pass the House without changes to the proposed elimination of state and local deductions.

In addition, Republicans will have to consider making some tax cuts only temporary to comply with Senate rules. Under the process the GOP is using to pass a tax bill, it cannot create budget deficits outside of a 10-year window.

Ryan said Republicans do not "intend" to have tax reductions expire but will do it to make sure the bill complies with rules.

Here are some of the other differences the House and Senate will have to agree on:

  • The Senate bill would delay a corporate tax cut until 2019. In the House bill, it would start next year.
  • The Senate plan maintains the mortgage interest deduction on newly purchased homes at $1 million. The House bill caps it at $500,000.
  • The Senate proposal would double the exemption for the estate, or so-called "death," tax, but not repeal it. The House bill would double the exemption and eventually eliminate the tax.
  • The House plan cuts bonds that fund affordable housing, but the Senate doesn't.

Correction: This story was revised to correct that Ryan spoke on Tuesday.