November 14,2017

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Hatch Releases Modifications to Senate Tax Plan

Updates Boost Middle-Class Relief, Give Job Creators Greater Certainty & Put Bill In Line With Budgetary Rules

WASHINGTON – Today, Senate Finance Committee Chairman Orrin Hatch (R-Utah) released the modified chairman’s mark for the Tax Cuts and Jobs Act.

The modified mark will effectively repeal the individual mandate tax to help provide additional relief to low- and middle-income families, create more certainty for American job creators by ensuring business provisions – like the globally-competitive corporate tax rate and international tax system – are permanent, and work to address the so-called Byrd Rule to ensure the legislation complies with the Senate budgetary rules for reconciliation.

“Remaking the tax code in a way that will lift hardworking, middle-class families has been among the chief goals of our effort,” Hatch said. “By scrapping this unpopular tax from an unworkable law, we not only ease the financial burdens already associated with the mandate, but also generate additional revenue to provide more tax relief to these individuals. In this revised mark, Americans families will see the child tax credit double and individual rates dip even further. Additionally, the modified mark creates more permanence in our tax system so that American job creators can invest in the long term, grow their business and create new jobs.”

Under the modified mark, the child tax credit is doubled from the current $1,000 to $2,000 – allowing more parents to claim the credit. Individual tax rates for middle-income Americans are reduced from the current rate of 22.5 percent to 22 percent; 25 percent to 24 percent; and 32.5 to 32 percent, which will help taxpayers keep even more of their hard-earned money. The chairman’s modified mark also updates the measure’s pass-through provisions to better assist Main Street businesses.

The changes to the chairman’s mark earned the endorsement of the National Federation of Independent Business (NFIB).

“American small businesses are the engines of our economy, helping to create two-thirds of net new jobs each year,” Hatch said. “The pass-through provisions in the chairman’s mark have been further streamlined to ensure these critical job creators have access to the resources they need to further expand, help hire new workers, and increase employee take-home pay.”

The chairman’s modification incorporates a variety of amendments that were filed by both Finance Committee Republicans and Democrats to better reflect member priorities. The Senate Finance Committee will reconvene its committee markup of the Tax Cuts and Jobs Act tomorrow morning at 10 a.m. ET. You can watch here.


Individual Mandate Tax:
Under the Affordable Care Act (ACA), a burdensome tax is levied against the American people, forcing them to either pay a fine or pay for health coverage they don’t want and can’t afford. According to the Internal Revenue Service, nearly 80 percent of Americans who paid the penalty in 2015 made less than $50,000. According to the Joint Committee on Taxation (JCT), reducing the individual mandate tax penalty to zero will raise $318 billion over 10 years – money that can be used to provide further tax relief to American families. Eligible individuals who choose to enroll in coverage will continue to receive premium tax credits to help them afford coverage.

Pass-Through Provisions:
The chairman’s modification also includes additional tax relief for pass-through businesses (i.e., partnerships and S corporations), including services pass-through businesses. Taxpayers generating taxable income of up to $500,000 (married filing jointly) / $250,000 (all others) would be exempt from the W-2 wage limitation that otherwise might limit taxpayers from obtaining the full benefit of the 17.4 percent deduction on their qualifying pass-through income. In addition, pass-through income from services pass-through businesses for taxpayers with taxable income up to these levels ($500,000 / $250,000) would fully qualify for the 17.4 percent deduction.  

The chairman’s modification makes permanent the 20 percent corporate tax rate as well as shifts in the structure of the international tax system, and makes adjustments to ensure compliance with the so-called Byrd Rule and other budget rules.

A copy of the chairman’s modified mark can be found here.

A score of the modified mark may be found here.