House Ways and Means Committee Chairman Kevin Brady said Republicans are on track to release tax legislation Thursday, after a day of intense wrangling over details including the fate of a state and local tax deduction.
The bill will “definitely” be released Thursday, Brady said Wednesday evening, one day after he aborted the rollout amid resistance from GOP lawmakers from Democratic states.
“No question,” the Texas Republican told reporters.
However, Brady hedged when asked whether a crucial part of the plan, a long-promised tax cut for corporations, would be permanent.
“That’s our goal, and I think it’s going to take several steps through the process to achieve that,” he said, referring to “awfully funny” Senate procedural rules requiring any permanent tax changes to be paid for.
Lawmakers, lobbyists and others have speculated that the cut would have to be temporary or phased in over a number of years to comply with Senate budget rules that allow Republicans to get around a Democratic filibuster.
Earlier Wednesday, tensions were running “very high,” said a source familiar with the eleventh-hour talks. Figuring out how to pay for final changes to accommodate Republican holdouts was just one of several issues that bedeviled Ways and Means members. It was not immediately apparent how they bridged that difference, though making the corporate tax cut temporary could be one of the strategies.
That wasn’t the only problem Republican leaders confronted. Republican tax writers could be heard speaking in raised voices Tuesday night during a more than two-hour meeting at the Capitol. Sources say there was some unhappiness among rank-and-file members who feel the plan has been written largely by party leaders without their input.
“Members on the committee feel their views are not being listened to,” the source familiar with the eleventh-hour talks said.
Meanwhile, people on both sides of Pennsylvania Avenue were growing impatient. White House economic adviser Gary Cohn told GOP senators during a closed-door lunch Wednesday that House Republicans need to release their tax bill before Friday, when President Donald Trump is leaving for Asia, according to two people who attended. Another White House official seemed annoyed by the postponement, telling Politico that Brady for weeks had promised he had the rollout under control.
And conservative leaders in the House, who have not been part of the closed-door deliberations, started to draw parallels to the GOP’s botched health care effort — a knock on party leaders who saw major blowback for the secrecy surrounding the creation of their Obamacare repeal legislation.
“Anything that gets done in a cloak of secrecy is certainly not what an open and deliberative body should do,” warned House Freedom Caucus leader Mark Meadows (R-N.C.).
Republican Study Committee member Mark Walker (R-N.C.) said there’s an “urgency” among members to see the text. They are eager to put their mark on the legislation.
Trump might have complicated matters Wednesday when he tweeted that lawmakers should repeal the Affordable Care Act’s individual mandate, apparently as part of the tax plan.
“Wouldn’t it be great to Repeal the very unfair and unpopular individual mandate in ObamaCare and use those savings for further Tax Cuts,” the president tweeted.
The Ways and Means Committee was forced to delay its much-awaited rollout Wednesday after a last-minute tweak to its proposal left it hundreds of billion dollars short, according to two Republican sources following the talks closely. That change, which would allow people from high-tax states to deduct their property taxes, was an effort to win over lawmakers from those states.
The tweak forced Republicans to adjust other parts of their delicately crafted tax bill in order to find savings.
For instance, the state and local property tax change could take away money otherwise dedicated to the personal side of the tax code, like a full repeal of the estate tax or Ivanka Trump’s proposed expansion of the child care tax credit.
“In order to offer the New Jersey and the New York folks a fix, they’ve been looking for more pay-fors,” said one House Republican source close to the talks. “It’s a very, very expensive fix.”
The cost is important because under Senate budget “reconciliation” rules that Republicans plan to use to muscle their plan through the chamber, any provisions that add to the government’s long-term debt must lapse, a requirement known as the “Byrd rule,” after the late Sen. Robert Byrd (D-W.Va.).
It’s still unclear whether the modification to the state and local tax deduction will win over Republicans from New York, California and New Jersey. Even after meeting Tuesday with Vice President Mike Pence and speaking with Cohn and Treasury Secretary Steven Mnuchin by phone, Long Island Rep. Lee Zeldin was adamant Wednesday that the deduction — which also includes state and local income and sales taxes — be salvaged in its entirety.
“My position remains … that we shouldn’t be eliminating the state and local tax deduction at all,” he said.
ut Zeldin’s ask differed from those of other members from high-tax states, some of whom were open to compromise. Rep. Tom Mac- Arthur (R-N.J.) said he was willing to consider the property tax deduction middle ground being offered by Brady. Rep. Claudia Tenney also said she wanted to get to “yes” on the bill, though she said she wanted income tax to be deducted as well as property tax.
“The people in the brackets we’re concerned about weren’t seeing enough of a tax cut, and that’s why we’re negotiating for more and they recognize that and are coming back with more,” she said.
Zeldin is unlikely to get his wish of retaining the entire state and local tax deduction. House Republicans like Majority Leader Kevin McCarthy of California view the tax break as a crutch for Democratic-run states that overtax their constituents — and then turn to the federal government to subsidize them. Republicans also note that the high-tax areas are typically represented by Democrats who will have no say on the GOP plan.
Party leaders are still struggling with how to finance their plan. Brady wants to raise money by pushing people out of 401(k) accounts and into so-called Roth accounts, which tax retirement deposits when they are made rather than when they’re withdrawn.
But some fellow Republicans worry that the change would feel like a tax increase to many people. There’s also concern it would curb retirement savings because while 401(k)s are widely known, Roth accounts are much less popular.
There are also questions about a proposal to impose a new tax on American companies that move overseas while still selling to U.S. customers, and on foreign companies operating in the U.S. Some fear that could lead to retaliation from other countries.
There are other potential landmines, such as how to prevent wealthy people from taking advantage of the lower 25 percent tax rate Republicans want to offer unincorporated businesses.
One option — to allow such “pass-throughs” to claim the reduced rate only on a portion of their profits and pay ordinary income taxes on the rest — risks the wrath of the influential small business lobbying group National Federation of Independent Business. That’s because it would mean pass-throughs would end up paying more than the advertised rate.
Lawmakers are also believed to be considering imposing a new excise tax on the endowments of private colleges, which would be sure to provoke controversy.
Despite the troubles, Senate Finance Chairman Orrin Hatch (R-Utah) brushed off House Republicans’ delay in releasing their tax overhaul legislation.
“It’s hard to do a tax bill, and they’re very good at it. I have total confidence in them,” Hatch said in an interview Wednesday. “And if they need a little more time, that’s fine with me.”
Hatch said he is “not particularly” committed to rolling out a Senate bill on Nov. 8, which Sen. Bob Corker (R-Tenn.) on Tuesday said was the target date.
“It could be,” Hatch said, “but it’s hard for us to do that without knowing what the House wants to do.”
Colin Wilhelm and Seung Min Kim contributed to this report.
Powered by WPeMatico