Senate to Unveil 3 Trillion Dollar Tax Reform Bill Monday

The United States Senate is poised to reveal the draft of the Trump administration's extensive economic policy bill, commonly referred to as the tax reform plan, as early as Monday. The Republican Party is aiming to pass this 3 trillion dollar tax reform legislation before the 4th of July. Republican senators are scheduled to reconvene at the Capitol on Monday afternoon to receive a briefing on the bill. The text of the bill may be released later that day, signifying a major advancement in the Republican Party's efforts to push forward the core of Trump's economic agenda.

Senate Finance Committee Chairman Mike Crapo has dedicated several weeks to negotiating a compromise among the four factions within the party. These factions include conservative members advocating for deeper spending cuts, moderate members seeking to soften the cuts, business allies pushing for larger tax cuts, and members advocating for the retention of clean energy tax incentives that were removed in the House version of the bill.

One significant unresolved issue in the Senate's initial version of the bill is the handling of state and local tax deductions (SALT). Senators have indicated that the draft to be released on Monday will not resolve how the final legislation will address SALT. The SALT provision will either be left blank or set at the current cap of 10,000 dollars as a starting point for further negotiations.

Senate Majority Leader John Thune has stated that Republicans from low-tax states have little interest in raising the SALT cap to the 40,000 dollars level approved by the House. "I think we will find a compromise point. I hope this will gain the necessary votes in the House and reach a compromise on the SALT issue," Thune said.

Republicans representing high-tax states have stated that they will not accept any plan with a SALT cap lower than 40,000 dollars. They have indicated that if the final version does not provide sufficient deductions for state and local taxes, they will block the bill from passing in the House.

House Speaker Mike Johnson has also been pressuring Senate leadership to retain the 40,000 dollars cap to ensure the bill gains the necessary support in the House.

Energy companies will closely monitor the specifics of the phase-out schedule for clean energy tax incentives in the draft, particularly for projects already underway. The business community will also be watching for adjustments to Section 899 of the bill, known as the "retaliatory tax," which has raised concerns among foreign investors. Senators have indicated that they are seeking to mitigate the impact of this tax.

Senate Republicans have been advocating for months to make permanent three corporate tax incentives from Trump's first-term tax reform that are set to expire or are nearing expiration. These tax incentives are expected to cost several thousand billion dollars and include the research and development tax credit, increased deduction for business interest expenses, and full expensing of fixed asset purchases.

Sources close to the matter reveal that Trump has advocated for keeping these corporate tax incentives in a temporary status during discussions with Republicans, which puts him at odds with some party members. Trump believes that extending these measures only until 2029 will boost short-term economic growth. The president is open to shortening the duration of these tax provisions and prefers this approach to ensure they stimulate investment in the short term. However, the White House is also open to the Republican proposal to make these provisions permanent, as they understand this is a high priority for senators.