GOP lawmakers struggle to close gaps in tax plan
Top congressional Republicans, racing to hammer out a final tax agreement by the end of the week, have yet to make any breakthroughs on a range of key issues.
House and Senate negotiators bounced proposals back and forth over the weekend, but said Monday that they still had to find compromises on where to set the corporate tax rate, how to treat millions of businesses that aren’t set up as corporations and how much of a deduction to allow for state and local taxes.
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“We speak of little else these days,” said Senate Majority Whip John Cornyn (R-Texas).
On the House side, Ways and Means Chairman Kevin Brady (R-Texas) deflected questions about a slew of potential trouble spots, also including the estate tax, the Alternative Minimum Tax and the fate of an existing law barring churches and other tax-exempt groups from openly politicking.
Asked Monday what differences the House and Senate had resolved, Sen. John Thune (R-S.D.) responded: “Well, nothing really.
“I don’t think you can say at this point anything is really nailed down,” added Thune, a member of GOP leadership and the tax conference committee working to settle the chambers’ differences. “But I think the way it’s shaping up right now, I feel like we’re getting pretty close, and every time that we have an exchange of offers the differences are narrowing.”
Republicans are hoping to get a final tax bill to President Donald Trump’s desk by Dec. 20 or even sooner, according to a source familiar with negotiations. Brady said Monday that he still expected a final vote next week, and a public meeting of the conference committee is scheduled for Wednesday.
But a compromise measure would still need to be vetted to ensure that it doesn’t violate strict Senate budget rules, a process that may start in the next couple days and could offer clues about what’s in a final deal. And Republicans are facing increased pressure from Democratic lawmakers to slow down the rapid conference process; Senate Democrats on the tax conference committee are demanding at least three public meetings on merging the House and Senate bills.
“We’ve got just a few headline issues. How we land on rate structures, breaks in the brackets are important issues,” said Sen. Tim Scott (R-S.C.), another member of the conference committee.
Scott added that negotiators were still grappling with how to “sweeten the SALT” problem, referring to differences over a state and local tax write-off. One of the things they are examining is whether to allow taxpayers to deduct both property and income taxes they pay to states, cities and counties.
Republicans have been wrestling for months with that issue. After first setting out to eliminate the deduction entirely, they’ve had to restore a property tax write-off, up to $10,000, to satisfy GOP members from the Northeast who represent districts with high real estate taxes. But lawmakers from California, where property taxes are less of an issue, are clamoring for something on the income tax side of the equation.
The corporate tax rate remains another key sticking point. The rate is still “being discussed and debated,” Thune said, along with when it would take effect.
Both chambers have settled on a 20 percent rate — down from the current 35 percent — but the Senate has proposed delaying its implementation until 2019. And some lawmakers and administration officials have indicated a rate as high as 22 percent may be in play to cover the cost of adding provisions to guarantee enough votes for the plan.
Conservative groups reiterated their support for a 20 percent corporate rate on Monday, but at least one prominent activist didn’t shut the door to a slightly higher rate.
“While there is strong, consistent support for a 20 percent rate,” said Chrissy Harbin, vice president for external affairs for Americans for Prosperity, “we are going to consider these packages holistically and make a decision at that time on Friday,” when they expect a final tax package to be released.