Senate votes to start talks with the House on striking a tax deal

  • The Senate votes to form a conference committee with the House to craft a joint tax bill.
  • Republicans hope to pass a plan overhauling the American tax system by Christmas.
  • The chambers still need to resolve key differences between the bills.

Senate Republicans voted Wednesday to go to a conference committee with the House to strike a deal on a plan to overhaul the American tax system.

The Senate moved to form a conference committee by a 51-47 vote. The House has already voted to form a conference committee.

The chambers will aim to nail down key differences between separate bills passed by the House and Senate. If the House and Senate agree on a joint tax bill, both chambers will need to pass it to send it to President Donald Trump's desk.

Republicans hope to approve a tax proposal by Christmas.

The House and Senate will need to compromise on multiple differences in order to craft a final bill that can pass both chambers. For one, they will need to decide how to treat the controversial corporate alternative minimum tax, which the House bill would eliminate but the Senate plan would keep.

They will also need to reach agreement on the amount of state and local tax deductions and mortgage interest deductions taxpayers can take. Members of Congress from high-tax blue states have pushed for broader state and local deductions.

The individual tax bracket structure and treatment of the estate tax, or so-called death tax, could also emerge as sticking points.

Republican leaders are also considering cutting the corporate tax rate to 22 percent, rather than the 20 percent corporate rate in the House and Senate bills, according to two senior Republican lawmakers who spoke to CNBC.

President Donald Trump has signaled that he could be open to the change, which would help the GOP to raise revenue to pay for other tax cuts in the bill.

Ylan Mui contributed reporting