The Senate has passed a critical resolution on Thursday night, which is its budget resolution. This is meant to pave the way towards tax reform, potentially as soon as later this year or maybe early next. The budget resolution is a mechanism which unlocks a procedure called reconciliation. Reconciliation allows the Republicans to move towards tax reform without having to rely on democratic votes. We still have a need now for the House to adopt a version of the budget resolution which is similar to the Senate's. When that finally happens, it means the Republicans can move towards putting out detailed tax changes.
The key hurdles are for the House and Senate to put forward a harmonised budget resolution, and then for tax draft legislation to be put forward by the key tax writing committees, the Ways and Means Committee in the House, and the Finance Committee in the Senate. Those bills then would need to be marked up, they'll to be voted on in the two chambers and a unified bill, which is common to both chambers-- a harmonised bill would then need to be approved by Congress and sent to the president's desk.
As I said earlier, there is clearly a hope that this could happen by the end of this year. I think the more realistic prospect is that tax reform happens in 2018. Even then, there are some people who question whether the Republicans will be able to muster the votes to agree a tax reform package, which is an immensely complicated piece of legislation. But, certainly, the party is putting an awful lot of weight on getting tax reform through. It sees tax reform as a critical element in its prospects for re-election in the House and the Senate next year in midterm elections.
We have only very sketchy details of what the tax reform package will look like at this stage, and the budget resolution itself, which was passed by the Senate, merely said that they envisage tax cuts of around $1.5 trillion up to $1.5 trillion. That is-- there is no more detail, really, than that in terms of the Senate resolution. There was a framework put out by the so-called big six, who are key players in the whole tax reform effort from the Republican Party, that gave us some idea that there'll be a steep, potentially, cut in corporation tax, changes to the individual side of the tax in order to make it simpler, potentially the removal of a bunch of deductions, which people can take against their tax bill. Again, in this quest for simplification. More, contentiously, perhaps are the potential repeal of estate tax, which many Republicans call death tax, the tax that you pay on your estate.
These are all very, very sketchy proposals. However, as I said, what we really need in terms of seeing the detail of how a tax reform package and how everything balances up and amounts to that $1.5 trillion-- if that is, indeed, the ultimate size of the tax cutting package when it goes through the two houses-- is to see the draft tax legislation from these two key committees, Ways and Means and Finance. It will be a number of weeks before we see that.