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House budget would provide reconciliation instructions for potential tax changes

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Tax Hot Topics: House tax reconciliation instructionsThe House Budget Committee voted 20 to 16 on March 16 to approve a budget resolution that would give the House Ways and Means Committee authority to move tax legislation using reconciliation instructions.

The budget is generally a nonbinding framework for tax and spending priorities, but reconciliation instructions allow tax bills to avoid 60-vote procedural hurdles in the Senate. The reconciliation instructions in the new House budget would require any reconciliation bill to raise $1 billion or more, suggesting that the tax component of any reconciliation bill generally would need to be at least revenue neutral. The revenue-neutral instructions are consistent with the rest of the budget, which includes a policy statement promoting tax reform and a reserve fund meant to encourage revenue neutral tax reform.

Both the House and Senate would need to approve a resolution for reconciliation instructions to take effect, and the current House budget is still contentious. Conservatives have threatened to derail it without tighter spending caps, and the Senate Budget Committee is not currently planning on writing a budget or taking up the House version.

Senate Budget Committee Chair Mike Enzi, R-Wyo., said in early March that his committee was indefinitely postponing action on a budget because of disagreement among Republicans. Enzi could later decide to take up the House budget or write his own resolution, but it appears unlikely.

Even with a budget resolution, major tax changes would be difficult in an election year. Congress passed a budget resolution last year with similar reconciliation instructions, but they were ultimately not used to avoid the need for a 60-vote majority in the Senate and advance any tax legislation.

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