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Republicans in U.S. Congress scramble after tax bill debut delay
November 1, 2017 / 7:43 PM / 2 months ago

Republicans in U.S. Congress scramble after tax bill debut delay

WASHINGTON, Nov 1 (Reuters) - After an embarrassing delay in the unveiling of their tax-cut bill, Republicans in the U.S. House of Representatives scrambled on Wednesday to resolve disputes amongst themselves on how to pay for the cuts they are proposing.

From mortgage interest and 401(k) retirement plans to the federal deficit and state and local taxes, numerous unanswered questions swirled around the $6 trillion tax-cut plan.

Formal legislation was to have been unveiled on Wednesday by the House tax committee but, after a flurry of late-night talks on Tuesday, the debut of the bill was postponed until Thursday.

Representative Tom MacArthur, asked if his fellow Republicans could meet the ambitious deadline of approving the House bill by the Nov. 23 Thanksgiving holiday, told reporters: “I’ve been called a lot of things but ‘prophet’ is not one of them.”

Since taking over both chambers of Congress and the White House in January, the Republicans and President Donald Trump have yet to score a major legislative accomplishment.

That will change, they say, when they overhaul the tax code for the first time in 31 years. But they are fast discovering why every attempt to do that has failed since former Republican President Ronald Reagan’s historic tax reform in 1986.

Unlike the nearly three-year Reagan effort involving public hearings and bipartisan cooperation, the Trump tax plan was developed in secret over a few months by six senior lawmakers and White House advisers who took little input from rank-and-file Republicans and largely ignored the Democrats.

Virginia Republican Representative Dave Brat played down the delay. He emphasized the importance of the plan’s proposed tax cuts for corporations, small businesses and individuals. “If we can keep that structure, I think we’re going to be in OK shape,” said Brat, part of a powerful House conservatives group.

North Carolina Representative Patrick McHenry, a member of House Republican leadership, said arbitrary deadlines - such as the missed deadline of Wednesday for unveiling the bill - do not work.

“We’re not going to allow the idea of rolling it out on a Wednesday rather than a Thursday determine something as substantive ... as tax reform,” he said.

Like Brat, MacArthur said the plan’s biggest challenge is a proposed elimination of a tax deduction for state and local taxes paid, one of several changes meant to raise new tax revenues to offset the deep tax cuts. Other lawmakers and lobbyists cited different concerns..

TRUMP REVISITS OBAMACARE

Trump, in largely a cheerleader role in the tax debate, offered his own advice on Twitter on Wednesday about finding money to cover the proposed cuts.

“Wouldn’t it be great to Repeal the very unfair and unpopular Individual Mandate in ObamaCare and use those savings for further Tax Cuts ... for the Middle Class,” he said in a Twitter post on Wednesday. “The House and Senate should consider ASAP as the process of final approval moves along. Push Biggest Tax Cuts EVER.”

House Republicans may not find that advice helpful. An attempt to repeal Obamacare, the healthcare law enacted in 2010 under former Democratic President Barack Obama, collapsed dramatically in the Republican-controlled Senate in July.

“At this late stage, I do not see healthcare coming into our tax bill,” said New York Republican Representative Chris Collins, a Trump ally.

Massachusetts Representative Richard Neal, the top Democrat on the House tax committee, wrote to the panel’s chairman, Texas Republican Representative Kevin Brady, urging him to postpone plans to consider amendments to a tax bill next week.

“I write to urge you in the strongest possible terms to slow this tax reform process to a pace that will allow for reasonable, informed deliberation,” Neal said in his letter.

A rough framework of the tax plan was unveiled in late September but its basic components were changing.

STUMBLING BLOCKS

On the state and local tax (SALT) deduction, Republicans were working on a compromise to reduce, but not eliminate, a disproportional impact on upper-middle-class families in high-tax states such as New York, New Jersey and California.

Lawmakers said Republican leaders want to cap property deductions at $10,000, which others said was too low.

Those high-tax states send enough Republicans to Congress to derail any tax bill. Party leaders have been trying to quell a rebellion among these lawmakers and bring them on board.

“They’re working over concerned members one by one at this point,” MacArthur said.

Another proposal to limit how much Americans can put into their 401(k) retirement accounts and individual retirement accounts (IRAs) on a pre-tax basis was meeting resistance.

So was a proposal to limit the deductibility of interest payments by businesses. Restrictions are opposed by businesses with little access to equity financing, including farmers, ranchers and small businesses.

Lawmakers also have not resolved a challenge posed by Trump’s plan to lower the tax rate on pass-through enterprises, such as partnerships and sole proprietorships, to 25 percent from as high as 39.6 percent.

Reporting by David Morgan and Amanda Becker; Editing by Kevin Drawbaugh and Bill Trott

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