House Republicans were set to meet Thursday to discuss the possibility of changing one of the major provisions in the GOP tax reform plan meant to pay for tax rate reductions: the elimination of the deduction for state and local taxes.
Republicans from blue states that rely heavily on the deduction were scheduled to meet with the lower chamber's top taxwriter to discuss ways to make sure the tax proposal doesn't raise taxes for their constituents, a conversation also unfolding among Republicans on the House floor and in phone calls.
Members are "exchanging ideas on how we can make sure that those families are better off," said Rep. Kevin Brady, chairman of the House Ways and Means Committee.
"No decisions have been reached, or anywhere close to it, but we're having a really healthy discussion on ideas, options, alternatives," Brady told reporters.
Some Republicans from New York and New Jersey, in particular, have said that they will vote against an overhaul that does away with the deduction, which allows taxpayers to deduct taxes paid to state and local governments from their taxable income at the federal level. Many blue-state Republicans' constituents use the deduction to offset high property taxes.
That puts Republican leaders in a tough position. They can't lose many members of those delegations and still pass legislation. At the same time, if they lower their aims on raising revenue by eliminating the deduction, they won't be able to drive tax rates as low, a compromise that could sap conservative support for a bill.
Democratic leadership have staked out total opposition to limiting the deduction and sought to penalize Republicans for seeking to do so.
"We will not accept any elimination or weakening of this critical provision of our tax code," said Rep. Bill Pascrell, D-N.J., speaking at a press briefing with House Minority Leader Nancy Pelosi.
Elimination of the state and local tax deduction is the largest "pay-for" in the Republican tax framework, raising roughly $1.3 trillion over 10 years.
Republican leaders have suggested that rank-and-file members might come to support the package when they see the bill as a whole and all the benefits it would provide for families in blue states.
"These are the issues where we have to help members see the big picture," House Speaker Paul Ryan said Thursday morning at the Heritage Foundation.
They also have to make a case against the deduction based on fairness.
"The construction worker on the street is taxed higher, so the investment banker in the penthouse can get a break," Brady said of the state and local deduction, which mainly benefits higher income earners.
President Trump described the break as a subsidy paid by low-spending states to high-spending ones in an interview Wednesday night with Sean Hannity on Fox News. "It's unfair that a state that is well-run is really subsidizing states that have been horribly mismanaged," he said.
Ryan called on ideological allies Thursday to overcome opposition to the plan from industry groups that protect tax breaks such as the deduction.
"An army of lobbyists will come to protect special interest provisions and to derail tax reform," Ryan said at Heritage. "When it does, we must be able to count on the foot soldiers of the conservative movement to see this through."