House Republican lawmakers this week were working to reshape their party’s tax reform plan to reduce the pain of ending some of the most popular tax deductions before a planned vote on the bill next week.
House Ways and Means Committee Chairman Kevin Brady, R-Texas, is “listening” to Republican lawmakers who are asking for a wide variety of changes, but he has told lawmakers that any move to save a deduction from elimination must be paid for somehow in the bill.
The measure is expected to pass out of the Ways and Means panel Thursday. Majority Leader Kevin McCarthy, R-Calif., announced the House will vote on the bill next week.
Before the vote, however, many Republican lawmakers were looking for ways to save some of the deductions that the bill would eliminate. Rep. Chris Smith, for example, is asking GOP leaders to add back in the $13,500 deduction for people who adopt children — he helped make the deduction part of the tax law back in the 1990s.
“They are listening and that’s a good thing,” said Smith, R-N.J. “My hope is at the end of the day they will put it back in.”
Rep. Tom MacArthur, who also represents New Jersey, is working to convince Brady to raise the deduction for mortgage interest, which the GOP tax plan slashed from $1,000,000 to $500,000.
MacArthur represents a district with expensive houses and many constituents who own vacation properties that would be affected by the legislation.
“Trying to get it indexed for inflation, get it applied to second homes,” MacArthur said Tuesday. “And if we can, to get the limit higher as well. That is really my focus at the moment.”
A group of GOP lawmakers is also hoping to reinstall the deduction for state and local taxes, which was removed from the bill.
Others want to raise the property tax deduction, which was capped at $10,000.
Rep. Darryl Issa, a Republican who represents wealthy San Diego, said he can’t support the bill in current form because his constituents would pay more. He wants to eliminate some business tax breaks to ensure people in his district would be spared a tax hike.
“I am concerned about making sure we don’t give away so much that isn’t economically necessary, then at the same time tell certain people they have to pay tax increases,” Issa said.
Senate Republicans are also listing their objections to the House bill, even though they plan to produce their own legislation on Friday.
Sen. Tim Scott, R-S.C., opposes the House GOP plan to strip the deduction for historic preservation, which would hurt places like Charleston. Sen. Ron Johnson, R-Wis., wants the tax bill to further expand savings for small businesses.
“I have my own ideas and concepts,” Johnson said Tuesday.
But even MacArthur warned Tuesday that too many factions are asking for their deductions to be saved, which would jeopardize the quest to lower rates. MacArthur adopted two children, but is not pushing for the tax credit for adoptive parents to be restored.
“There is someone who wants every single exception in the tax code,” MacArthur said. “There are groups lobbying every member because they want this piece or that piece. If you listen to every group, you are not going to end up with a tax bill.”
Meanwhile, many conservatives are also pushing for deeper tax cuts. The Club for Growth released a list of the bill’s “shortcomings” on Tuesday, and said it wants to repeal the estate tax immediately, as opposed to language in the current bill that would phase out that tax over time.
Club for Growth also wants changes to small business tax rates so a larger percentage of a company’s income would be assessed at the lower rate.
And some Senate Republicans, including Ted Cruz of Texas, and Tom Cotton of Arkansas, are demanding the tax bill repeal the Obamacare mandate that requires people to purchase health insurance.
The House bill doesn’t include the mandate repeal and probably won’t add it, although it would provide $400 billion in tax savings and perhaps spare the GOP from having to eliminate some of the popular deductions.
“It would make it much easier,” to pass the bill, Cruz said on Tuesday.
