The Senate passed early Saturday a sweeping $1.4 trillion tax cut package that includes troublesome aspects for small-business retirement plans.

The Tax Cuts and Jobs Act, which must now be reconciled with the House version, passed by a vote of 51-49. One Republican, Sen. Bob Corker of Tennessee, voted against the bill, and all Democrats voted no.

House Speaker Paul Ryan, R-Wis., stated after the vote that lawmakers now will “move quickly to a conference committee so we can get a final bill to President Trump's desk.”

Brian Graff, president and CEO of the American Retirement Association, says the Senate bill's pass-through language creates a disincentive for small-business owners to offer retirement plans.

The Senate bill “would increase the deduction for pass-through income from 17.4% to 23%. So for business owners with pass-through income that would be subject to a 35% ordinary tax rate, the effective tax rate on their pass-through income is slightly less that 27%,” Graff said.

The nettlesome issue is that because “retirement plan contribution allocable to the business owner is effectively deducted at the pass-through tax rate of 27%, and then subject to the ordinary tax rate of 35% when distributed at retirement, you have essentially eliminated the value for the business owner to save in the plan,” Graff explains.

“In fact, the business owner would be financially better off paying the tax now and saving outside the plan.”

So the bill offers essentially little “motivation to take on the administrative costs and ERISA liability of a plan in that instance.”

The way to fix this is to have the small-business owners' “allocable retirement plan contribution be separately stated and applied solely against income that is taxed at ordinary rates,” Graff said. But “the way this legislation is barreling through Congress, they haven't had time to address technical issues like this.”

House Ways and Means Committee Chairman Kevin Brady, R-Texas, added in another statement that lawmakers will “take the best of both the House and Senate bills, make them even stronger in a conference committee, and finalize one piece of legislation” to hand to Trump this year.

Senate Finance Committee Chairman Orrin Hatch, R-Utah, said the measure “also takes a critical step forward in improving our nation's flawed and unworkable health care system” by effectively repealing the “regressive Obamacare individual mandate tax.”

With this move, Hatch said, “we are putting Americans in charge of their health care and giving them the freedom to choose the best coverage for themselves and their families.”

A repeal of the individual mandate would reduce federal deficits by $338 billion over the next 10 years but would result in 13 million more uninsured Americans in that time, according to the Congressional Budget Office.

Comparing the House and Senate Bills

The Tax Foundation on Saturday issued an analysis comparing the House and Senate bills that are to be reconciled in conference.

While the House bill repeals the corporate and individual alternative minimum tax, the Senate bill retains the corporate AMT in its current form, and retains the individual AMT with higher exemption amounts (about 40% higher than current law).

The House bill increases the estate tax exemption to $10 million, indexed for inflation, with repeal after six years, while the Senate version doubles the estate tax exemption. Under current law, the exemption would be $5.6 million for an individual in 2018.

The Senate bill, the Tax Foundation said, “moved in the House's direction on several important issues, and was already identical on key points. Both move to chained [Consumer Price Index]. Both retain the state and local tax property tax deduction, capped at $10,000.” After a floor amendment adopted Friday night in the Senate, “both expand 529 college savings accounts to apply to some primary and secondary education expenses. Both feature a 20% corporate rate. That does not mean, however, that the two versions are identical.”

Democrats Predict Social Security, Medicare Cuts

But the top Democrat on the Finance Committee, Sen. Ron Wyden, R-Ore., stated that “millions of Americans must be watching in stunned disbelief tonight as this Republican Senate sells out the middle class for the benefit of faceless multinational corporations.”

Said Wyden: “How many Americans need to lose their health care or see their premiums shoot sky-high before this bill is stopped?”

Passing the Senate bill “is the first step towards the coming attacks on Medicare, on Medicaid and on Social Security,” Wyden said.

The Economic Policy Institute argued in a Saturday statement that the Senate bill “is nothing more than a giveaway to the richest households and corporations, period.”

The bill “will raise taxes on many low- and moderate-income households, and the deficits it will leave in its wake will be used to attack Social Security, Medicare and Medicaid.”

Senate Minority Leader Chuck Schumer, D-N.Y., stated late Friday before the vote that “substantively — the Republicans have managed to take a bad bill and make it worse.”

The GOP bill, he continued, “was chock full of special interest giveaways before tonight. But now, under the cover of darkness and with the aid of haste, a flurry of last-minute changes will stuff even more money in the pockets of the wealthy and the biggest corporations, while raising taxes on millions in the middle class.”

This article was originally appeared at ThinkAdvisor.