In plain English: How the US government changes the tax code.
As tax law changes are happing at breakneck speed in both the US and Canada, I thought it would be a good idea to explain how tax law in the US is changed. When I was growing up watching Saturday morning cartoons, a show that frequently came up was "School House Rock", showcasing short clips on everything from grammar, to government, and more. I am going to refer to an episode from school house rock which explains how a bill becomes a law.
Sometimes the president wants to issue an executive order. This is explained in a short SNL parody below:
The area within the House of Representatives what deals with tax issues is the "House Ways and Means Committee" When the bill goes to the Senate the committee that deals with the tax code is the "Senate Finance Committee". As of the date of this article, the comprehensive tax overhaul bill is in the Senate. This committee is presided over by Senator Orrin Hatch (Republican, Utah). I was privileged to meet Senator Hatch in University, as he brought forth a motion to the floor of the Senate regarding an organization I belonged to.
My impression of Senator Hatch from back then runs true with his actions thus far. He is tough, but fair in advancing agendas he believes in. Tax reform is absolutely an agenda he believes in, and as he is coming up on retirement, I sense this bill has more meaning, more impact to him as the outcome of this bill will define his legacy.
In the Senate, this bill needs 51 votes to pass. Currently there are 54 republican senators, 44 democratic, and two independents (who align with the democrats).
If the Senate can hang on to 51 votes, it will go to President Trump's desk, where it is almost assuredly going to be signed. For More details on where the bill currently stands, please see my blog entry: "(Updated) What Trump's tax proposals mean for Americans in Canada".
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About the author: Ian Davis is currently Canada’s only former IRS auditor; and Founder and President of US Tax Resources Inc. A Canadian firm whose mission is to provide stress relief from US tax through simple and affordable tax preparation and advisory services.
Ian is a dual US/Canadian citizen living with his family in Canada.