WASHINGTON — The final tax bill will offer only a stripped back version of the current and state and local tax deduction that is widely used in New York as Republicans raced to finalize their tax legislation by Friday to tee it up for Senate and House votes early next week.
Rep. Kevin Brady (R-Tex.), a key Republican tax writer, confirmed that the bill would cap the deduction for any combination of state and local property, sales and income taxes at a total of $10,000, and that the top tax rate would drop to 37 percent for higher-income filers.
“Our state and local lawmakers from California to New York have made this a priority,” said Brady. But Rep. Peter King (R-Seaford) said he rejects the measure as inadequate for Long Island homeowners, who he said will be hurt by the loss of the full current deduction.
Final GOP tax bill cuts rates for businesses, wealthyThe bill creates seven brackets for individuals and married couples, reduces the top corporate rate to 21 percent, doubles the child tax credit and caps deductions for state and local property taxes at $10,000.
That provision ranked as one of the many tradeoffs in the sweeping $1.5 trillion tax overhaul that President Donald Trump promised Americans as a Christmas present, though it faces potential hurdles in the Senate.
Senate Republicans’ thin 52-vote margin faced a threatened defection Thursday by Sen. Marco Rubio (R-Fla.), who demanded a more generous and refundable child tax credit, backed by Sen. Mike Lee (R-Utah), who said he was undecided on his vote.
House Speaker Paul Ryan (R-Wis.) said Thursday he will be flexible on the schedule for the separate House and Senate votes next week in deference to Senate Majority Leader Mitch McConnell as he weighs possible absences of hospitalized Sen. John McCain (R-Ariz.) and ailing Sen. Thad Cochran (R-Miss.).
Already, Sen. Bob Corker (R-Tenn.) had said he would vote no because the bill adds $1.5 trillion to the federal government’s $20 trillion deficit over 10 years. And Sen. Susan Collins (R-Me.), could be wavering on her support for the bill she voted for earlier this month.
Still, Trump and Republicans leaders in Congress expressed optimism about their ability to garner the votes needed from their party. “I think we will get there, and it’ll be in a very short period of time,” Trump said. “It will be the greatest Christmas present that a lot of people have ever received.”
The final legislation will be finished by Friday morning and made public later in the day, said Brady, a top member of the conference committee ironing out differences between the Senate and House tax bills.
Vice President Mike Pence will postpone his planned trip to Israel and Egypt next week for a few days in case he is needed to cast the tie-breaking vote on the tax legislation in the Senate next week, his office announced.
Republicans appear to be closer to assuring passage in the House, where their members approved their bill with nine votes to spare last month, after complaints about the scrapping of the current state and local deduction, often called SALT, led to a handful of GOP no votes.
The bill also allows homebuyers to deduct the interest on up to $750,000 of a new mortgage, down from the current $1 million but up from the proposed $500,000.
Brady, who chairs the tax-writing House Ways and Means Committee, defended the lowering of the top rate from 39.6 percent to 37 percent. “We’re lowering the deductions for some Americans so we can lower the rates for everybody,” Brady said.
He also said that the bill does help the middle class by doubling the standard deduction, creating a bigger zero-rate bracket and offering a new family tax credit that is double its current size. “That is tax relief for middle income families in a big way,” he said.
But King said in an email, “This change really adds nothing to SALT relief for most constituents who are home owners. It would assist constituents who rent and pay income tax and sales tax.”