Tax Conference Committee Update: 5/15

On Sunday, the Tax Conference Committee exchanged a round of offers and counteroffers.  The current situation, and its evolution, can be found here.

Notable House offer changes (not exhaustive)

• The House has moved off worldwide combined reporting and is accepting the Senate’s proposed GILTI taxation (the language of which has not made an appearance yet). The House is also accepting the Senate’s reduced dividend received deduction.
   
• The House is not on board with phaseout modifications for standard and itemized deductions for high income earners or the net investment income tax. (The fifth tier remains).
   
• To fill the target revenue raising gap, the House is now proposing the repeal of the sales tax exemption for qualifying new and refurbished data centers. Qualifying projects entail a minimum company investment of $30 million and the exemption is analogous in a high tech sense to the existing sales tax exemptions on manufacturing inputs. Noting a couple of past attempts to end this exemption, Chair Gomez said the revenue estimate when first established was a fraction of what actually transpired and its cost has ballooned over time. Chair Gomez also questioned whether the use of public money generates the type of activity it was intended to generate, although the “ballooning” itself might seem to suggest it's had an effect on attracting investment.
   
• The House has moved off from the combined working family /child tax credit design and is accepting the Senate’s proposed credit form.  Some differences remain.
   
• The automatic inflator has been removed for LGA and CPA moving the House closer to Senate position.

Notable Senate offer changes (also not exhaustive)

• 50% reduction in the angel tax credit
   
• Dropped sales tax exemptions for baby products, fiber and conduit, and amenities associated with athletic event admission
   
• Moves to the House position of establishing an ongoing (no longer one time) tribal aid program (albeit smaller appropriation)
   
• Agrees to House position of one-time boost in homestead and rental refund program (again smaller appropriation)

One discussion topic yesterday concerns the appropriateness of new aid programs in the tax bill.  The House bill includes two housing related aid programs totalling $138 million that the Senate believes should be carried in housing finance.

More offers and counters expected today.  Additional discussion on non-cost items might be forthcoming as well.

The committee is expected to convene around noon Monday with the House holding the gavel.