The US House of Representatives on November 16 voted 227 to 205 to pass the ‘Tax Cuts and Jobs Act’ (HR 1). There were 13 Republicans who voted against the legislation. The bill proposes to lower business and individual tax rates, modernize US international tax rules, and simplify the tax law, with significant impacts on numerous sectors of the economy.
The Senate Finance Committee on November 16 approved, by a 14 to 12 vote, a Senate version of the ‘Tax Cuts and Jobs Act’ (the Finance bill or the bill) that differs in key aspects from the House-passed tax reform bill. The Finance Committee on November 20 released the 515-page statutory text for the bill as reported, along with a 74-page section-by-section description.
The full Senate is expected to consider floor amendments to the Finance Committee-approved tax reform bill during the week of November 27, following Congress’ Thanksgiving holiday recess week. Once the Senate has approved its tax reform bill, the two chambers must reconcile differences between the two bills and then vote to pass a final bill in identical form before tax reform legislation can be signed into law by President Trump.
The tax reform legislation being considered in the House and Senate remains open to significant changes as Congress attempts to overcome political hurdles that could affect the prospects for enacting sustainable reform of US tax laws, providing a more competitive tax system for business taxpayers and improved economic opportunities for individuals and families. Power and utility companies considering the effects of these provisions should look at the overall benefits of reforms intended to boost US competitiveness and productivity through lower business tax rates, a modernized international tax system, and incentives to invest in the United States.
Certain of these proposals may require new strategies and a rethinking of business models and supply chains, which could take considerable time to develop and implement. As tax reform moves through the legislative process, companies should continue to model the effects of proposed provisions and develop action plans to mitigate risks and take advantage of potential opportunities. Organizations with advanced insight into the potential impact of the proposals being considered should be able to respond more rapidly to changes if and when legislation is enacted.
Energy, Utilities & Mining Tax Leader, PwC US