January 25, 2017; Roll Call

House and Senate Republicans are attending a retreat in Philadelphia this week. Agenda items include legislative priorities, political campaign support, and guest speakers including Donald Trump and Peyton Manning.

Leading up to the GOP retreat, House Freedom Caucus chair Mark Meadows made an interesting comment about plans for tax code overhaul, a Republican priority for several years that has garnered some bipartisan support. Specifically, he expects tax reform to be included in the fiscal 2018 budget process. “I think it will be done in reconciliation, if it will be done.”

Why would tax reform be included in the reconciliation process? Votes. Specifically, budget reconciliation is one of the few bills not subject to filibuster in the U.S. Senate. With 52 Republicans in the senate, Democrats, acting as a voting bloc, can delay or derail most legislation by extending debate indefinitely—a filibuster. Lifting a filibuster, technically known as invoking cloture, requires 60 votes.

Nonprofit advocates have been following various tax reform initiatives in Congress, including two efforts by Rep. Dave Camp (R-MI), Kevin Brady (R-MI), Speaker Paul Ryan’s “A Better Way” agenda. President Trump has his own tax reform plan in mind, but it has not yet been presented in legislation. The various packages address issues including political activity by nonprofit organizations, the charitable tax deduction, the regulation of large endowments, estate taxes, and unrelated business income taxes (UBIT).

If the GOP adopts the legislative strategy Meadows mentioned, two things happen. First, major changes to the federal tax code become much more likely, assuming that all Senate Republicans sign on to the tax package and support budget reconciliation. Second, Congressional Democrats lose the ability to block tax reform and, therefore, are less able to negotiate compromises that will address their concerns and the needs of their core constituencies.

Using reconciliation may not be palatable to Republican Congressional leaders who wish to maintain a working relationship with Democrats. After all, even in hyper-partisan times, most legislation is not partisan or controversial, and there are benefits to legislators of different parties speaking with each other and even cooperating to achieve shared goals. Legislation passed using reconciliation is forever branded as somehow not worthy of the same respect as bills that pass under the typical legislative process, referred to in parliamentary language as “regular order.”

Meadows may be a minority voice within the Congressional majority party. It’s important to remember that the House Freedom Caucus that Meadows chairs is the extremely conservative wing of the House GOP that sees Paul Ryan as not conservative enough or enough of a hard-liner. However, he’s likely correct in saying that budget reconciliation may be the only way to pass tax reform. The last major federal tax reform legislation was enacted during the Reagan administration in 1986.—Michael Wyland