Three decades after President Reagan's historic signing of the Tax Reform Act of 1986, the hopes for a similar monumental moment rest on the shoulders of President Donald Trump. However, the path from a tax proposal to the President's desk is no easy feat. It involves traversing the intricate labyrinth of the Halls of Congress, overcoming obstacles, and weathering the storms of political dynamics.
The House of Representatives: The Starting Point
The inception of all tax legislation occurs in the U.S. House of Representatives, consisting of 435 members apportioned by state population. Elected to two-year terms, these members are in a perpetual cycle of elections, creating an environment where campaign considerations may influence legislative decisions. When one party gains control of both the House and Senate, the likelihood of tax reform legislation increases.
Any Representative can introduce a tax bill by placing it in "the hopper," a wooden box within the House Chamber. The bill then goes to the Ways & Means Committee for extensive consideration, including input from external departments and agencies.
If the bill is deemed a priority, the committee's chair schedules a public hearing to gather community input. After receiving public comments, a "markup" session is scheduled to consider amendments to the original bill.
At this stage, the committee must favorably report the bill to the House floor for further action. For the bill to progress to the U.S. Senate, it needs a simple majority (218 out of 435 votes) in the House.
The Senate: A Realm of Possibilities
Upon reaching the Senate, a tax bill's fate becomes uncertain. Senators can approve the bill as is, amend existing provisions, or replace the bill entirely with new ones.
Unlike the House, where representation is based on population, the Senate has only two members per state, regardless of size. Senators serve six-year terms, providing a longer time frame between elections.
The Senate Finance Committee takes the lead in reviewing the House bill. Members debate, discuss, amend, and vote on the measure. Before reaching the full Senate floor, the bill must be favorably reported out of the Senate Finance Committee.
Once the Senate version is before the full Senate, it requires a simple majority (51 out of 100 votes) to move forward. In the case of a tie, the Vice President can cast the tie-breaking vote.
Conference Committee: Resolving Differences
The bill then proceeds to a Conference Committee comprising House and Senate Members. Their task is to reconcile differences between the House and Senate versions.
As Otto von Bismarck aptly noted, "Laws are like sausages–you should never watch either one being made." This sentiment resonates with the intricate political drama surrounding tax reform, documented in the book "Showdown at Gucci Gulch." The interplay between lobbyists and legislators, especially during election cycles every two years, adds complexity to the legislative process.
The final conference bill may undergo substantial changes, reflecting compromises reached during the committee's deliberations.
Final Approval: President's Desk
Before becoming law, the enrolled bill must go back to the full House and Senate for approval. A simple majority in both chambers is required to move the bill to the President's desk.
The President then has 10 days to sign or veto the enrolled bill. If vetoed, the bill can still become law with a two-thirds majority vote in both chambers – a challenging feat requiring more than 350 legislators to agree.
President Reagan's quote from three decades ago gains resonance in the context of this intricate legislative process. To traverse the journey from one end of Pennsylvania Avenue to the other, a tax bill must endure Spring training, summer double-headers, and several playoff games before reaching the World Series.