Daniel Hemel on the House-Senate Tax Conference: "A Byrd’s Eye View "

The House-Senate Tax Conference: A Byrd’s Eye View

Delegations from the House and Senate are meeting this week to work out differences between the tax bills passed by the two chambers. Their compromise, known as a conference report, will then go back to each chamber for final approval. Looming large over these negotiations is a Senate procedural requirement, the Byrd rule, that dictates which measures can pass the Senate by simple majority rather than requiring 60 votes to break a filibuster.

The Byrd rule applies in the Senate to all measures that are passed through the budget reconciliation process, including to the House-Senate conference report. It is the source of the requirement — familiar to many in the tax world — that a bill passed through reconciliation cannot add to the deficit outside the budget window (which in this case is 10 years). It is also the source of a little-understood requirement that every provision in a reconciliation bill must produce revenue effects that are more than “merely incidental” to the non-budgetary consequences. While the primary focus of news coverage and commentary on the Byrd rule in recent weeks has been on the deficit limitations, the Byrd rule’s “merely incidental” proviso is likely to play an increasingly important role as House and Senate negotiators hash out a conference report.

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Tax policy