House passes budget resolution; steps toward tax reform | KPMG | US
Share with your friends

House passes budget resolution; steps toward U.S. tax reform legislation

House passes budget resolution; steps toward tax reform

The U.S. House of Representatives today passed, by a vote 219 to 206, a FY 2018 budget resolution that, according to Ways and Means Chairman Kevin Brady (R-TX), “paves the way for once-in-a-generation, transformational tax reform.”


Related content

The FY 2018 resolution, H. Con. Res. 71 (115th), includes reconciliation language instructing the Ways and Means Committee to generate $52 billion in budgetary savings and reforms from various programs under its jurisdiction. The House Budget Committee expects that the Ways and Means Committee will include “revenue neutral” tax reform as part of its reconciliation package.

Meanwhile…over in the Senate

Senate Budget Committee Chairman Mike Enzi (R-WY) last week presented a FY 2018 budget resolution—one that would allow the Senate Finance Committee to promulgate legislation to reduce revenues and change outlays that would increase the deficit by up to $1.5 trillion over a 10-year period (through 2027). Read TaxNewsFlash.

The Senate Budget Committee is considering this resolution today. The Senate budget resolution needs to be approved by the Senate Budget Committee and the full Senate.  Amendments may still be made to the Senate version of the resolution. 


Update: The Senate Budget Committee late on October 5, 2017, approved the budget resolution. Read a Senate Budget Committee release

What’s next?

Ultimately, differences between the House and Senate budget resolutions (including the size of the revenue instructions that may be used for tax legislation) must be negotiated, and the House and Senate must agree to the same bill.  

The president does not need to sign the budget resolution.

KPMG observation

Congressional Republicans hope that House passage of a budget resolution is a first step towards tax reform. Adoption by the House and Senate of a budget resolution containing reconciliation instructions for the tax-writing committees may allow “budget reconciliation” to be used for tax legislation.  

Budget reconciliation rules would enable Republican leadership to attempt to move tax reform in the Senate with only 51 votes. In the Senate, subject to limited exceptions, it typically takes 60 votes to avoid a filibuster (which otherwise could delay or block legislative action). Although Republicans control the Senate, they hold only 52 seats.  

Budget reconciliation provides a process by which some types of legislation (including certain tax measures) can move forward in the Senate with only a simple majority vote. However, to use budget reconciliation, the House and Senate first have to agree on a budget resolution that sets the revenue objectives for tax reform. The House-Senate resolution would instruct the tax-writing committees to report legislation in the form of a “reconciliation bill” that achieves the revenue objectives.  

The reconciliation rules include a number of complex procedural limitations and conditions that can affect the substance and design of the underlying legislation. For example, the reconciliation rules include a requirement that any title of legislation generally cannot increase the federal long-term deficit in any year beyond the “budget window” (which in recent years, has been a 10-year window). That is, the tax legislation ultimately produced may need to be drafted so as to not contain a net tax cut in years outside the budget window.

© 2019 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

KPMG International Cooperative (“KPMG International”) is a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us


Request for proposal