A last-minute assurance on a critical tax deduction and the promise of a future vote on fiscal restraint will help ensure House passage of a budget resolution on Thursday, which could put the GOP in a position to pass tax reform this year.
Republican leaders late Wednesday appeared confident they will pass the Senate’s $4 trillion budget resolution. The spending blueprint has significant differences from a plan authored by the House, but it includes room for a $1.5 trillion tax cut that Republicans are desperate to advance as part of a legislative tax overhaul.
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Passing the budget gives Republicans a chance to pass related tax legislation that can advance and pass in the Senate with just 51 votes, instead of 60. That makes passing the budget a critical first step for tax reform.
“There are four or five different factions still trying to get there, but I do expect it to pass,” Rep. Mark Walker, chairman of the Republican Study Committee, told the Washington Examiner.
The faction led by Walker, R-N.C., includes 170 Republican lawmakers, a majority of the House Republican Conference, and the group supports the budget.
Walker told the Washington Examiner his members were reluctant to vote for the Senate budget plan because it does not cut federal spending or reform mandatory program costs. But in exchange for the RSC’s support, Republican leaders promised to hold a vote on a balanced budget amendment as well as votes on “two or three pieces of legislation” by next spring that would be aimed at reducing the deficit, including provisions that would reform mandatory spending.
“With that kind of agreement, we were willing to say, ‘OK, we’ll get our guys behind it,'” Walker said. “The RSC members will be solidly behind it.”
But Republicans are having a harder time winning support from some members of a group of more than 30 GOP lawmakers from states with high local taxes. Many of those GOP members are opposed to a provision in the Republican tax reform outline that would eliminate the deduction for state and local taxes, known as the SALT deduction.
The holdouts include some of the 13 GOP lawmakers from New York and New Jersey, where state taxes are among the highest in the nation. Ending the federal deduction for state taxes is a hard pill to swallow for those Republicans.
Rep. Leonard Lance, R-N.J., said he is a firm “no” vote on the Senate’s budget resolution. The Senate measure, which is non-binding and is not the actual tax legislation, includes language allowing a change in the local and state tax deduction.
“I am opposed to a document that in any way suggests we should eliminate SALT,” Lance said.
Ways and Means Committee Chairman Kevin Brady, R-Texas, has been meeting frequently with Republicans from New York and New Jersey, mostly to provide assurances that the deduction matter will be resolved.
“A solution will be announced” before the tax bill is released next week, Brady said Wednesday.
Rep. Chris Collins, R-N.Y., said one idea circulating involves capping the SALT deduction at approximately $400,000 for a family. Any taxes over that amount, he said, could not be deducted, but that would only affect the highest income earners in those states.
“Every indication is there will be a compromise or an accommodation,” Collins said, “whether it’s means tested or otherwise.”
But, Collins added, “not by tomorrow.”
The lack of a specific agreement on the SALT issue will cost the GOP some votes on the budget, such as Lance’s. But Collins plans to vote for the budget, and despite the lack of a resolution on the disputed deduction, he thinks it will pass.
“There may be one or two exceptions, but I think the rest of our delegation understands we have to get tax reform done,” Collins told the Washington Examiner. “It’s a must and the only way to get it done is starting with a budget. So I believe the budget does pass.”
The House GOP whip’s office, which keeps track of party support for impending votes, appeared confident Wednesday, even as Brady held another meeting in the evening with GOP holdouts on the SALT deduction.
“We are doing the work to have a good vote on this budget tomorrow,” Chris Bond, a spokesman for House Majority Whip Steve Scalise, R-La., said. “It’s a critical step toward enacting pro-growth tax reform, and providing tax relief for families and job-creators is a goal that unites Republicans.”
