The final version of Republicans’ tax plan was sent from the House to President Donald Trump Wednesday. Although the major provisions of the bill have been reported all week long, the legislation got three minor last-minute tweaks in the Senate, necessitating one final House vote.
The bill was passed in both the House (by a vote of 227 to 203) and the Senate (by a vote of 51 to 48) on Tuesday, but minor provisions of the bill were subsequently found to have violated the Senate’s “Byrd rule.”
The Byrd rule requires that, in order for one party to pass a piece of legislation with a simple majority vote in the Senate, all of its provisions must have an impact on the budget that is “non-incidental.”
Simply A Formality
None of the last-minute tweaks to the bill are meaningful, according to Height Securities analyst Stefanie Miller.
“Two of the provisions were policy measures that would have allowed families to use 529 education accounts to pay for home-schooling expenses and earmarked an exemption from the college endowment tax for a private college in Kentucky,” Miller said in a Wednesday note.
The other violation of the Byrd rule involved the “short title” of the bill, which Republicans changed from “Tax Cuts and Jobs Act” to “An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018.”
The last-minute changes are simply a formality, and tax reform is all but a done deal at this point, Miller said.
Investors certainly seem to be pricing in tax reform. In the past month, the SPDR S&P 500 ETF Trust (NYSE: SPY) is up 3.6 percent and the SPDR Dow Jones Industrial Average ETF (NYSE: DIA) is up 6 percent.
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