Final tax reform bill passes House, now moves to Senate
WASHINGTON — The House passed the final tax reform plan Tuesday, moving a sharp reduction in the corporate tax rate for banks and other businesses to within a few steps of becoming law.
The bill, which passed the House by a vote of 227-203, was the product of conference committee negotiations between House and Senate lawmakers to reconcile separate bills passed by the two chambers. The Senate is expected to pass the final plan as early as Tuesday. Under normal circumstances, the bill would then go to President Trump for his signature.
However, after the House passed the bill, the Senate parliamentarian found three provisions that did not comply with Senate rules and must be taken out. As a result, the House is expected to re-pass the bill without those provisions on Wednesday, at which time it would head to the president's desk.
The bill would lower the corporate tax rate from 35% to 21%, a reduction hailed by the financial services industry. The final report also addressed some concerns that financial institutions had about an earlier version's treatment of mortgage servicing rights.
“The tax bill will help make American businesses of all sizes more competitive, add more jobs, and increase wages,” Tim Pawlenty, CEO of the Financial Services Roundtable, said in a press release.
However, the bill will force some banks to have to write down the value of deferred tax assets due to their lower tax obligation. The plan also makes it harder for banks to deduct the costs of Federal Deposit Insurance Corp. premiums. It eliminates the deduction for banks with more than $50 billion in assets, and limits the deduction for banks with assets of $10 billion to $50 billion. Banks with assets of less than $10 billion will still be able to write off their deposit insurance premiums.
The bill also imposes a $750,000 cap on loans that qualify for the mortgage interest deduction. That cap was a compromise between the competing House and Senate plans, which, respectively, had set caps of $500,000 and $1 million.