Tough decisions loom for GOP on tax-cut plan
Leaders say success is crucial ahead of next year’s elections
Congressional Republicans face critical decisions this week as they move within striking distance on a major legislative package to cut taxes, an achievement party leaders say is crucial to stabilizing the GOP’s recent political tailspin ahead of next year’s elections.
The House plans to vote on a GOP tax bill by week’s end that would slash taxes for companies and overhaul the tax code for virtually every American family and individual. And the Senate Finance Committee plans to vote on its version of the package within the next few days.
Stark differences between the House and Senate tax bills remain unresolved, but there is enough overlap and — so far — muted intraparty resistance, making the White House increasingly optimistic that an agreement can come by Christmas, as President Donald Trump has repeatedly promised.
Enactment of the taxcut package would mark Trump’s first major legislative accomplishment at a point when his job approval rating has dropped to a record low for this point in a presidential tenure.
Still, potential quagmires remain. House and Senate Republicans risk colliding over whether Americans should be able to deduct local property taxes from their federal taxable income. The House GOP bill would allow Americans to deduct up to $10,000 of those taxes from income as a way to placate complaints from conservatives in high-tax states such as New York, New Jersey and California.
In an interview Sunday, Rep. Kevin Brady, R-Texas, chairman of the House Ways and Means Committee, stood firm on that provision, saying it is important to “make sure people keep more of what they earn, even in these high-tax states.”
Americans are permitted to use local property taxes as well as state income taxes to offset parts of their federally taxed income. Senate Republicans in their proposal have so far refused to allow for the deduction of any of those taxes.
Meanwhile, House and Senate bills differ importantly on how a huge corporate tax cut would go into effect. In the House GOP bill, the tax rate for corporations would fall from 35 percent to 20 percent in 2018. In the Senate bill, the tax cut wouldn’t take effect until 2019, delaying some benefits for corporations but shaving more than $100 billion off the cost of the change.
Congressional Republicans have not indicated how they plan to address this discrepancy, but finding agreement on the timing of the cuts and how to treat property tax income would resolve some of the biggest outstanding issues.
Ten months after Republicans took control of the White House and Congress, the imperative could hardly be greater for a party that repeatedly fell short of its promise to repeal and replace the Affordable Care Act.
The results of Tuesday’s election - in which Democrats swept governor’s races in Virginia and New Jersey, as well as other contests around the country — have heightened the need for the GOP to demonstrate that it can govern. So, too, has the controversy that has enveloped Roy Moore, the GOP Senate candidate in Alabama, who has been accused of making romantic and sexual advances on teenagers when he was in his 30s.
Failure to deliver on tax cuts, a growing number of Republicans say, could have consequences in races across the country next year, particularly if GOP donors close their wallets and the enthusiasm of grass-roots volunteers is sapped by the inaction.
“They have to pass something they can call tax reform or get under their desks and wait for the shelling,” said John McKager “Mac” Stipanovich, a longtime Florida-based GOP consultant. “The perceived level of dysfunction in a Republican-led Congress and the perceived level of incompetence in a Republican-led White House would have enormous consequences in the 2018 election.”