House Republicans plan to keep the current top individual tax rate of 39.6 percent in the tax legislation they aim to release Wednesday, but other major questions about the tax package were unresolved Tuesday night with only hours to go until the hoped-for rollout.
The plan would keep the current top individual tax rate on very high incomes, according to one person who attended a meeting with House Speaker Paul Ryan on the tax plan Wednesday. The Republican framework agreed to with the Trump administration allowed for the possibility of the tax-writing committees keeping the top rate in place to raise revenue for the package and to limit tax cuts for high-earners.
Yet other major questions remained unanswered Tuesday evening.
Most notably, House Ways and Means Committee Chairman Kevin Brady told reporters that no resolution had been reached on the concerns of blue-state Republicans worried that the planned elimination of deductions for state and local income taxes could result in tax increases for their constituents.
“We certainly are listening very carefully,” Brady said, noting a planned meeting with representatives from New York and New Jersey later Tuesday night.
Rank-and-file Republicans still did not know the bill’s contents Tuesday. The Republican conference was scheduled for a briefing Wednesday morning. Brady, though, declined to state when on Wednesday bill text would be available.
Another major item that had not been resolved was the parameters of the child tax credit. Brady has said that increasing the credit would be crucial to ensuring that families in high-tax states still see tax cuts, even though they will be losing part of their ability to deduct state and local taxes.
Brady said that it was also “to be determined” whether the plan would include additional incentives for charitable giving and what the effective date of the tax bill would be.
All those issues were left to be resolved later Halloween night and into the morning.
Furthermore, the plan released Wednesday will be subject to change immediately. Brady said he plans to replace the initial legislative text with an amendment, what is typically known as a “chairman’s mark,” for consideration at the committee markup scheduled for Monday. That amendment could include substantive changes to reflect public input, Brady suggested.
One such change could be to the treatment of retirement plans. In just the past week, House Republicans and the Trump administration have been drawn into conflict over the possibility of changing the tax treatment of 401(k) savings.
Nevertheless, the plan remains for a breakneck pace of legislating to get a bill on President Trump’s desk by the end of the year.
Toward that end, the House and Senate are expected to work concurrently on tax legislation, with the Senate Finance Committee introducing its own bill not long after the House acts.
“I think we’ll probably be on somewhat parallel tracks,” said Sen. John Thune of South Dakota, the number-three Republican in the Senate.
"By the time we start marking up, hopefully they’ll be on the floor," Thune told reporters at the Capitol.
"Chairman Hatch intends to lay down a mark for the committee to advance in the coming weeks,” said a representative for the Senate Finance Committee. “Details will be released when finalized.”
The House version of the bill will include repealing the estate tax, according to the person briefed, but it is likely to be phased in or delayed for budgetary reasons. The corporate tax rate will be 20 percent, House Majority Leader Kevin McCarthy told reporters on a call Tuesday. To pay for that rate reduction, corporations will lose some ability to deduct the cost of interest payments from their taxable income.