GOP to delay release of tax bill
House Republicans rushing to finish a far-reaching tax cut package by Thanksgiving conceded late Tuesday that they would have to delay the release of their legislation by a day.
The GOP now says the bill will be released on Thursday as lawmakers scramble to reach a consensus on how to restructure the nation’s tax laws.
Fights over possible changes to the tax status of 401(k) retirement plans and the state and local taxes deduction are at the center of the delay.
Lobbyists chattered throughout the day over whether Wednesday’s big unveiling of the GOP tax package would have to be delayed as it became clear that lawmakers were differing over various reductions.
Hours before the decision was made to punt the release for a day, Brady told reporters that he intended to release text of a bill Wednesday — but that it would not be a chairman’s mark.
This would allow Brady to make changes to the text through the weekend ahead of a planned markup on Monday in the Ways and Means Committee.
President Trump had sought to quash any changes to 401(k) plans last week, but it has become clear that Republicans have not stopped talking about shifting the tax status of the plans as they seek to ensure their bill does not add to the deficit after its first 10 years. Republicans have discussed lowering the amount people can put into their retirement plans before taxes, which could increase the amount of revenue initially hit by taxes.
Under current law, people under 50 can put up to $18,000 in a 401(k) plan annually before it is hit with taxes. Taxpayers do not have to pay a tax on the money until it is removed from the account.
On the state and local tax deduction, the tax framework Republicans released in September called for a full repeal, but GOP lawmakers from high-tax states such as New York and New Jersey have expressed opposition, warning it would hurt their middle-class constituents.
Brady appears to be moving toward a compromise that would allow a deduction for local property taxes — a concession that could win at least some support from the blue-state Republicans.
“I think we’re moving in the right direction,” Rep. Leonard Lance (R-N.J.) said on CNN Tuesday.
At the same time, Lance — a top target for Democrats in next year’s midterm elections — stopped short of saying the compromise would win his support.
Other Republicans echoed his concerns.
“This is still very damaging to my district. Based on what I know, I will say that I’d still have to vote no,” Rep. Pete King (R-N.Y.) told The Hill.
Brady said he expects that the Joint Committee on Taxation will release a revenue estimate of the bill before the markup that does not take into account economic effects. A “dynamic” score that factors in economic effects is expected to come out after the markup and before the bill gets a vote on the House floor.
The bill’s unveiling would launch the GOP’s blitzkrieg effort to try to pass legislation by Thanksgiving and trigger a lobbying bonanza from both supporters and opponents. Any delay in the bill’s introduction is not helpful given the time pressures, though the delay of one day would not affect the planned Monday markup.
Trump and congressional Republicans are under pressure to deliver a big victory on taxes, since they have yet to have a major legislative accomplishment so far this year.
As part of the White House’s efforts to boost momentum on the tax effort, Trump on Tuesday met with representatives of business groups including the U.S. Chamber of Commerce and the National Association of Manufacturers and urged them to sell the bill to the public.
“We need you to be united, committed and proactive in order to overcome the forces fighting,” Trump said.
The president said he wants the House to pass a bill by Thanksgiving and to hold a signing ceremony by Christmas.
“It will be the biggest tax event in the history of our country,” the president said.
While details have yet to be set in stone, the bill is largely expected to follow the guidelines congressional GOP leaders and the White House outlined in September.
The bill will cut the corporate tax rate from 35 percent to 20 percent and will lower the top rate for businesses whose income is taxed through the individual code to 25 percent.
Speaker Paul Ryan (R-Wis.) told conservative activists Tuesday that the corporate rate cut wouldn’t be phased in, according to people familiar with the meeting. Trump has opposed a phase-in.
On the individual side, the bill will include three rates of 12, 25 and 35 percent. Ryan said that the bill will also include a fourth rate for high earners of 39.6 percent — the current top individual rate — according to people familiar with the meeting.
The measure is also expected to nearly double the standard deduction, increase the child tax credit and eliminate a number of tax breaks.
Ryan also told conservatives that the bill would repeal the estate tax but would likely not do so immediately. Either the bill would begin to phase out the tax right away or the tax would be completely eliminated at some point in the future.
Several aspects of the bill are sure to draw opposition from various trade groups, and Republicans in recent days have been working to try to prevent opposition from members of their own party.
Major groups in the housing industry are expected to push back because the bill is expected to reduce the number of people who would claim the mortgage-interest deduction and concentrate those who do take it at the top of the income scale.
Another area to watch is the nonprofit sector, which is concerned that the near-doubling of the standard deduction will reduce the number of people who claim the charitable contributions deduction, leading to a decrease in donations. They are also concerned that charity-related provisions in former Rep. Dave Camp’s (R-Mich.) 2014 tax bill will resurface.
“We’re kind of expecting the worst and hoping that we’re wrong,” said Steve Taylor, senior vice president for public policy at United Way.
The financial industry will be keeping an eye out for what the tax bill sets as a cap for the amount that people can put into 401(k) accounts on a pre-tax basis.
“We don’t want to do anything to erode the success of the employer-based retirement system,” said Jill Hoffman, a vice president at Financial Services Roundtable.
Besides various trade groups, many Democrats are sure to come out against the bill and criticize it as a boon for the wealthy that will explode the deficit.
“This theory churned out by right-wing think tanks that tax cuts will pay for themselves is totally absurd,” Senate Minority Leader Charles Schumer(D-N.Y.) said. “It’s utter, self-serving bull.”