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.
Sen. 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%, 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% 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.