WASHINGTON, D.C. — The U.S. House of Representatives passed a $1.5 trillion Republican tax cut bill on Nov. 16, by a vote of 227-205.
The measure – the Tax Cuts and Jobs Act (House Resolution 1) – repeals the estate tax, enhances Section 179 expensing and drops the number of tax brackets from seven to five. It reduces the corporate income tax rate from 35 to 20 percent and nearly doubles the standard deduction for individuals and married couples.
It also maintains Section 1031 like-kind exchanges for real property such as land and structures.
Thirteen Republicans voted against the bill, and no Democrats voted for it.
Senate Republicans have been working on their own tax relief package. Their initial proposal, released Nov. 9, includes some provisions that differ from the House bill. For example, both proposals increase the amount of property exempt from the estate tax, but the Senate version doesn’t call for an eventual repeal of the tax.
The House version reduces the number of tax brackets from seven to five, while the Senate plan would maintain seven brackets but change the rates on taxable income. The Senate version also includes a repeal of the Affordable Care Act provision that requires most Americans to carry health insurance.
The Senate proposal does keep many key components of the House plan – enhanced Section 179 expensing, like-kind exchanges – of interest to farmers, said Bob White, director of national government relations for the Indiana Farm Bureau.
“Overall, the House bill is not too bad,” he noted. “If you listen to the think tanks, you can ask five of them and get seven different versions of what it does to the middle class. The Republicans got a victory and they’re all happy about that.”
Senate Republicans will probably formally introduce their bill next week and hope to vote on it quickly, White said. Then a conference committee will need to work out the differences between the House and Senate versions.
The National Farmers Union said the House legislation would give tax cuts and breaks to corporations and wealthy Americans. The organization urged House members to vote against the bill.
Craig Uden, president of the National Cattlemen’s Beef Assoc., called the House bill “a step in the right direction.” He praised the legislation for eliminating the estate tax, preserving step-up in basis and increasing Section 179 expensing.
“These are all victories for cattle producers,” Uden noted. “Unfortunately, the House-passed bill would also significantly limit the ability of some businesses from deducting their interest expenses. This could be a big problem for some members of the cattle-production business.”