After three days of arm-twisting, the Senate passed a budget resolution with language allowing tax reform to be passed with only a simple majority. For the first time in 30 years, tax reform could be reality, helping club staff and members alike. Tax reform may also have another impact—deciding which members of Congress keep their jobs. With increasing pressure from President Trump and constituents to pass major legislation after this year’s failed attempts to deliver on health care reform, another missed opportunity by Republicans may hurt their chances of holding a majority in Congress after the 2018 elections.
Last Best Hope?
As campaign season approaches, the two chambers have good reason to pass tax reform before Congress adjourns for the year on December 15. In addition to the president making it clear that he wants a significant bill to pass in 2017, constituents of the majority party also want Congress to pass legislation for which their representatives campaigned. After the divisive and controversial health care bills failed earlier this year, voters have become increasingly frustrated with a Republican-controlled Congress. If tax reform is not passed by the end of the year, incumbents may have the difficult task of running for reelection without having passed a major bill.
Maintaining a pro-club, pro-growth majority is possible without approving tax reform, however, it may remain divided and unable to smoothly pass legislation. In turn, a non-functional working majority in Congress may hamper the progress of pro-club legislation from passing. While much has been done in the past year to alleviate the financial and regulatory burdens on clubs, failing to have a functioning majority may stall or stop more pro-club efforts altogether. Delivering meaningful tax reform for the first time in three decades not only helps Americans, but alleviates voters’ fears and frustration by signaling that Congressional majority in the House and Senate can actually get something done.
What Could Be in the Tax Bill
The House tax bill is expected to be released November 1. Though the actual language has been guarded, there are a few provisions that we may see in the final text.
- A fourth tax bracket for high income earners. The current top individual tax rate is 39.6 percent. Speaker of the House Paul Ryan (R-Wis.), has stated that this top rate will stay but that it could even be higher.
- Potential removal of the state and local tax (SALT) deduction. There is discussion that the deduction should be capped—either based on total earned income or by amount of the deduction. It may still allow taxpayers to deduct property taxes.
- Mortgage interest deduction as well as the charitable contribution deduction may be capped—either based on total earned income or amount of the deduction.
- Reduction of the corporate tax rate to between 20-25 percent and creation of a pass-through tax rate of 25 percent for those in small businesses.
- Significant tax relief for the middle class which should stimulate the overall economy.
The overall tax reform package should provide relief for taxpayers and stimulate the overall economy. With a stronger economy and stronger economic growth throughout the country, club members should see greater returns on investments and in their business’ bottom lines. That should translate into better overall health for the private club industry.
However, failing to pass tax reform soon may not only harm the economy, but also limit the chances of the majority party of maintaining control after the 2018 elections and limit additional pro-club initiatives from passing in the years to come.
Phillip Mike is NCA’s senior communications manager.