House Republicans passed a $1.5 trillion comprehensive tax reform bill on Tuesday that lowers the corporate tax rate from 35% to 21% and preserves important tax credits used by the oil and gas industry.
The bill was headed for a Senate vote Tuesday night, but House lawmakers will need to vote on it again Wednesday morning after the Senate parliamentarian reportedly ruled that parts of the bill violated the reconciliation process, aka the Byrd Rule.
“Members are advised that we expect Senate Democrats to insist on a Byrd point of order on the conference report to accompany HR1, which is likely to be sustained,” House Majority Whip Steve Scalise (R-LA) said in a letter to GOP lawmakers, according to media reports late Tuesday afternoon. “As such, [House] members are further advised that an additional procedural vote on the motion to concur is expected” Wednesday, “which will clear the bill for President Trump’s signature.”
HR1, also known as The Tax Cuts and Jobs Act, passed the House by 227-203. Twelve Republicans joined all 191 Democrats in opposition. All but one of the GOP defectors represents California, New Jersey and New York, which have high tax rates; the bill eliminates some state tax deductions.
The bill was headed to the Senate, where Republican leaders expect to have the votes for passage. Quick passage by that chamber would fulfill a GOP goal of sending the bill to the White House for President Trump’s signature before Christmas.
A joint explanatory statement issued by a House-Senate conference committee last week showed HR1 preserves credits for enhanced oil recovery (EOR) and production from marginal oil and gas wells. The bill also kept deductions for intangible drilling costs, aka IDCs, and the passive loss exception. House lawmakers had advocated for repealing the EOR and marginal production credits, but the Senate and the conference committee disagreed.
“We did it!” Rep. Kevin Brady (R-TX), who chairs the House Ways and Means Committee, tweeted minutes after the vote. “The House has passed tax reform, one step closer to more jobs, bigger paychecks and fairer taxes for Americans everywhere.”
The committee eliminated the Corporate Alternative Minimum Tax, while agreeing to allow corporations to continue to take an Alternative Minimum Tax credit to offset the regular tax liability for any taxable year.
The tax bill also includes a controversial policy rider to open a portion of the Arctic National Wildlife Refuge, the 1002 Area, to oil and gas development.
Sen. Lisa Murkowski (R-AK), chairman of the Senate Committee on Energy and Natural Resources, said she was grateful that conferees had recognized “the significant opportunity within our energy title and agreeing to open the non-wilderness 1002 Area. If we can successfully pass this legislation, the ultimate result will be more domestic jobs, larger paychecks, and greater energy security– and that is exactly what Alaska and our country need right now.”
HR1 also calls for temporarily increasing the annual limitation on offshore revenue sharing under the Gulf of Mexico Energy Security Act (GOMESA). Currently, GOMESA has a $500 million annual limit on distributed qualified Outer Continental Shelf revenues from FY2016 through FY2055, but under the tax reform bill the limit would be raised to $650 million for FY2020-2021.
© 2023 Natural Gas Intelligence. All rights reserved.
ISSN © 2158-8023 |