The House and Senate Budget Committees both approved budget resolutions last week that would allow the tax-writing committees to use reconciliation procedures to expedite tax legislation.
The reconciliation process protects legislation from filibusters and other 60-vote procedural hurdles in the Senate. The 2001 and 2003 Bush tax cuts were passed with simple majority votes in the Senate using reconciliation.
The Budget Committee chairs of both houses indicated that the reconciliation instructions are meant to allow Congress to repeal and replace the health care reform bill, especially if the Supreme Court rules in King v. Burwell (No. 14-114) that individuals aren't entitled to premium tax credits on federal exchanges.
However, reconciliation instructions don't prescribe specific legislation, so tax writers would have the flexibility to use the reconciliation process on other tax legislation if priorities change. Both budget resolutions merely instruct the Senate Finance Committee and the House Ways and Means Committee to report legislation that would reduce the deficit by at least $1 billion over 10 years. These instructions would generally allow the committees to advance a tax bill of nearly any size as long as the overall score was nearly revenue neutral, but the reconciliation process has limits. Any provision that loses revenues, such as rate cuts, would need to be expired within 10 years.
There has been some talk of using the reconciliation for tax reform, but it appears unlikely. The tax- writing committees get to use the reconciliation instructions only one time per budget year, and Republicans are currently focused on health care. Tax reform would also be hard to achieve through reconciliation because any rate cut would need to be scheduled to expire. In addition, the president is unlikely to sign any tax legislation that is partisan enough to need the reconciliation process to survive the Senate.
The House and Senate must still pass their budget resolutions on the floor, then reconcile the two versions, for the reconciliation instructions to take effect. The Senate resolution carves out space in the budget for other tax priorities, including tax reform, extending the tax provisions that expired at the end of 2014 and repealing the medical device excise tax. The House budget calls for tax reform that reduces rates on both corporations and individuals and repeals the alternative minimum tax. Legislation on any of these issues would still need to be approved under regular procedures, but their inclusion in the budget does indicate Republican tax priorities.
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