Did Republicans accidentally kill corporate deductions, and will it force the Senate to revise and re-vote?

Question

An article in New York magazine indicates that

While Republicans were manically outlining their plans to take from the poor to give to the Trumps, they also, accidentally, nullified all of their corporate donors’ favorite deductions.

Specifically, it notes that

The GOP had originally intended to abolish the [Alternative Minimum Tax]. But on Friday, with the clock running out — and money running short — Senate Republicans put the AMT back into their bill. Unfortunately for McConnell, they forgot to lower the AMT after doing so.

This is a big problem. The Senate bill brings the normal corporate rate down to 20 percent — while leaving the alternative minimum rate at … 20 percent. The legislation would still allow corporations to claim a wide variety of tax credits and deductions — it just renders all them completely worthless. Companies can either take no deductions, and pay a 20 percent rate — or take lots of deductions … and pay a 20 percent rate.

^{(Emphasis from the original)}

This is followed by a quote from a Wall Street Journal article, which itself includes quotes from business people, indicating that this is a major mistake and a big problem.

The article concludes by describing two major problems with the bill in this state:

First and foremost, it means the Senate will almost certainly have to vote on a tax bill again before one goes into law. Previously, it looked as though Paul Ryan had enough votes in the House to pass the Senate bill as is.

and

The second implication is that McConnell is going to need new revenue. In all probability, Republicans are going to drop the alternative-minimum tax rate well below 20 percent. That will put the bill’s price tag over $1.5 trillion.

So my question is, basically, is this reporting accurate? I haven’t seen this reported elsewhere, so I’m not exactly sure what to make of it. New York magazine certainly tries to make it seem like a pretty big deal, but the lack of other sources reporting it may indicate that they are either misinterpreting what took place, or overstating its significance.

Answer 1

The reporting on the senate bill still having the AMT set at 20% and the new corporate tax level being at 20% while the house bill removed the AMT is accurate. Corporations have been outspoken in their opposition to the 20% corporation tax with the 20% AMT as it would essentially remove the tax benefits currently available for R&D funding and other tax-deductible business operations.

The House has voted to go to conference with the Senate on the bill, and the Senate is expected to do the same. Once this happens, lawmakers will nominate members from each house to join a conference committee who will negotiate and reconcile the differences in the bills to create a single bill, which a majority of those on the committee must approve for the bill to be finalized. Both houses will then vote again on the bill without amendment (the passing of which by both is all but a formality, as reneging at this stage would be political suicide) following which the bill will to go to the president.

There are three places to go from here:

1. The Senate version of this point is maintained, and any tax-deductible corporate spending is essentially non-tax deductible any more - though they'll have ample money to funnel that way given the tax cut - dashing a long-time GOP goal
2. The House version of this point is maintained, and the effective tax rate of many corporations drops below 20% resulting in $40 billion more in lost revenue over the next decade, making it harder for fiscal hawks to stomach
3. Some compromise of the two. My personal expectation: AMT is removed but base corporate tax rate set to 22%. This way the GOP gets their political win on AMT and the fiscal hawks can sleep a little better. Trump has stated he is open to this, in opposition to previous statements.

As an important note (thanks Josh Caswell), the House bill does not comply with the Byrd rule (nor does it have to), whereas the Senate bill has to. However, the reconciled bill will have to comply with this rule which has to do with containing the costs of the bill, which is part of the reason why the House bill is less fiscally sound from a government revenues perspective and the Senate bill reintroduced the AMT at the 20% rate at the last second - searching for ways to contain costs.

Answer 2

I'm not sure it was a mistake, as the New York article seemed to imply. See this Reuters article. "The decision to retain the corporate AMT in the Senate bill helped keep the legislation’s overall revenue loss within an agreed-upon limit of $1.5 trillion."