NY GOP lawmakers offer alternative to cutting state/local tax deductions
WASHINGTON — New York Republican lawmakers said they sent a proposal to House leaders Wednesday afternoon that would retain full property taxes deductions and partial deductions for state income taxes in the tax overhaul that is scheduled to be unveiled Thursday.
The proposal was sent as an alternative to the current Republican plan to cap deductions at $10,000 for property taxes and eliminate deductions for sales and state income taxes, a compromise offered by House Ways and Means Committee chairman Kevin Brady (R-Tex.).
“The alternatives include retaining the full property tax deduction and protecting the most significant elements of the income tax deduction,” said Rep. Peter King (R-Seaford), who led the effort with Rep. Lee Zeldin (R-Shirley) and Rep. Dan Donovan (R-Staten Island).
House Republican leaders have been trying to pay for the nearly $6 trillion in tax cuts for corporations, small businesses and individuals over the next decade by eliminating tax breaks and deductions, including one for state and local taxes.
That axed deduction has been one of the major sticking points for the Republican tax plan, whose unveiling Brady delayed for a day as he, his tax writers and House leaders sought to woo their caucus members unhappy with different parts of the package.
“These alternatives are made in good faith and we strong believe will protect the overwhelming majority of our constituents,” King said, adding that a number of the other six New York Republicans in the House backed the effort.
The New Yorkers sent the proposal to House Speaker Paul Ryan (R-Wis.), Majority Leader Kevin McCarthy (R-Calif.), Majority Whip Steve Scalise (R-La.) and Brady, King said.
The speaker’s office referred questions to Brady.
The negotiating comes as House Republicans prepared go public on Thursday with the tax cut bill they have been writing behind closed doors while struggling over details that determine winners and losers.
Brady delayed the planned Wednesday introduction of the complex legislation, signaling the Republicans’ difficulty in settling on legislation that will overhaul the nation’s tax system for the first time in three decades.
President Donald Trump remained optimistic, despite the postponement, telling reporters in a White House meeting on Wednesday with his cabinet that he will stand with top House Republicans when they introduce their legislation on Thursday.
“Sometime tomorrow, we’ll be announcing massive tax cuts and reform,” Trump said. “This week, the House Ways and Means Committee will unveil a historic tax plan that will create new jobs, higher wages — which hasn’t happened in many years.”
The delays and continued negotiations signal that hurdles remain as Republicans try to fast-track the bill for passage in the House before Thanksgiving and in the Senate before Christmas.
Under the GOP framework, the corporate rate would drop from 35 percent to 20 percent, seven individual tax brackets would be collapsed to three, small businesses would be taxed at 25 percent, and taxes would drop on companies’ overseas profits as lure to repatriate them.
The bill is scheduled to go before committee hearings on Monday and to be voted on in the House the following week — a swift path criticized by Democrats and some Republicans. The Senate plans to make public their version of the tax legislation next Wednesday.
Senate Minority Leader Chuck Schumer (D-N.Y.) and other Democrats portrayed the House Republican bill as a “tax giveaway” to the rich at the expense of the middle class.
Tax writers worked through night on the bill to add items to win over recalcitrant Republicans, to assuage some interest groups whose tax breaks are threatened, and to provide cover against Democrats’ charges that the bill was nothing more than “tax cuts for the rich.”
One change that has leaked out is that the bill will retain a tax bracket for wealthier filers, with incomes of $750,000 or $1 million, according to several reports.
An item stirring controversy is the proposal to lower the cap on tax-free contributions to the popular retirement savings account known as a 401(k), a measure that Trump has opposed.
Another land mine is the Republican tax writers’ move to end the deductibility of state and local taxes, which prompted Republicans in New York, New Jersey and other high-tax states to oppose a budget resolution that squeaked by in the House last week in a 216-212 vote.
Brady on Sunday had offered a compromise that would allow filers to deduct property taxes but not state or local sales and income taxes, saying lawmakers in high-tax states told him property taxes punish constituents the most
King said compromise was better than losing all SALT deductibility. But he also said he would continue to fight it because it still so “damaging” to his constituents and “it’s going to affect us for generations.”
Zeldin said he met with Vice President Mike Pence Tuesday for half an hour to discuss the SALT deduction and, separately, about U.S. policies regarding Israel.
Zeldin said he opposes eliminating the SALT deduction, and added, “As far as a potential compromise, I have not yet received an offer that works.”